WASHINGTON -- The major slump in the housing market is nearing an end and should not have a significant impact on the overall economy, Treasury Secretary Henry Paulson said yesterday.
'We have had a major housing correction in this country," Paulson said in an interview with a small group of reporters at the Treasury Department. "I do believe we are at or near the bottom."
Paulson said he realized there would be losses along the way but said he believed those losses have been "largely contained."
"It doesn't pose a risk to the economy overall," he said.
Paulson's comments echoed remarks by Federal Reserve chairman Ben Bernanke, who said June 5 that he believed the slump in housing would last longer than expected but that so far, "we have not seen major spillovers from housing onto other sectors of the economy."
The overall economy grew at a barely discernible 0.6 percent annual rate in the first three months of this year, the worst showing in more than four years. But many analysts believe growth has picked up significantly in the spring to around 3 percent or better.
Paulson said the U S economy is being helped by strength in other parts of the world, noting that unemployment in Europe is at a 15-year low and global financial markets have large pools of money to invest.
But he cautioned that investors must remain alert to risks given that there has not been any serious financial turmoil for quite a while.
"We have had benign markets for some time. That means there is less discipline," he said. "We have to be vigilant about risk, but we need to recognize this is a strong global economy."
Paulson refused to comment on legislation introduced in the Senate that would raise taxes on private-equity companies that decide to go public. Under current law, such firms have been able to go public while paying a partnership tax rate of 15 percent, compared with the corporate tax rate of 35 percent.
The Senate bill would require financial service and asset-management partnerships that go public after June 14 to pay the higher corporate tax rate. The bill would give a five-year reprieve from the higher taxes to firms that have already announced plans to go public, a provision that would exempt Blackstone Group LP, which plans an initial public offering of stock on Friday.