WASHINGTON U.S. growth will be tepid until mid-year but should get a one-two punch from tax rebates and lower interest rates to boost the economy, Commerce Secretary Carlos Gutierrez predicted on Tuesday.
"Our growth has slowed and will be slower throughout the first half of the year," Gutierrez said in an interview with Reuters. He maintained the economy was "fundamentally strong."
Gutierrez said a $152-billion fiscal stimulus program, signed into law by President George W. Bush last week, is a way of "guarding against the downside" of weaker growth.
It will nicely complement the cut the Federal Reserve has made in the benchmark federal funds rate to 3 percent from 5.25 percent since mid-September, he added.
Gutierrez said checks up to $600 for qualifying individuals and $1,200 for couples should begin reaching taxpayers late in the second quarter and during the third quarter.
"Monetary policy takes a bit longer, so that should start working in the late third quarter, fourth quarter," he said. "So there's a sequence to this and it should enable us to get through the correction."
TRADE PACTS NEEDED
Gutierrez said he wished lawmakers would work toward completing pending free-trade agreements with Colombia, Panama and South Korea with the same dispatch that they had shown in agreeing to the fiscal stimulus package, which was completed and signed into law within a weeks.
There are currently three agreements -- with Colombia, Panama and South Korea -- that the Bush administration wants passed but a Democratic-controlled Congress is resisting.
Gutierrez expressed concern that there might be a strategy on the part of Democratic lawmakers to "run out the clock" on approving the pacts now that the Bush administration's tenure is rapidly winding down.
"We should be passing those as quickly as possible and think of those as another stimulus, because our exports are doing very well and we can add to our growth and also protect against the downside by really taking advantage of our exports," Gutierrez said.
One of the Commerce chief's principal jobs is to boost trade and Gutierrez said it concerned him that there appeared to be a rise in U.S. protectionist sentiment that made free trade "a tough sell" at the same time that governments in Europe as well as China were moving aggressively to increase their share of global trade.