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US credit woe ‘easing’?

The US Treasury Secretary has made a bold statement about the country’s credit crisis…

In a recent interview, Henry Paulson said that he believed the worst of the credit crunch may have passed: “The financial market turmoil that has led to massive losses at Wall Street banks has eased, and we're closer to the end of this than the beginning. However, the US economy is still facing tough times as people cope with soaring petrol prices and a weak job market.”

Many economists expect the US to fall into a recession this year as a housing slump and market turmoil take their toll on the wider economy.  Mr Paulson took a more positive view: “I expect the economy to improve this year as the tax rebates get businesses and consumers spending again. We will get some help from the stimulus, but a second stimulus package is not on the agenda for now.

Mr Paulson concluded: “The credit crisis has eased since March, but credit markets are still not functioning in a normal manner. Mortgages, student loans and the lending that takes place between financial institutions all still affected by the credit squeeze, and I wouldn't be surprised at all to see more bumps in the road”.