Market News

Recovery to 'take time': Treasury head O'Neill says good companies don't worry about dollar

WASHINGTON (CBS.MW) - The U.S. economy will recover thanks to lower interest rates and tax cuts, but a recovery won't come overnight, Treasury Secretary Paul O'Neill said Monday.

"Corrections take time," O'Neill said on a Fox News television program.

"We started cooling down in September or October and we've been going through a cooling phase, a readjustment phase to get rid of inventories," he said.

O'Neill said most economists look for the tax cuts to add a half-percentage point to as much as a full percentage point to U.S. growth annually. Previously, his own calculations put that target at about 0.5 percent.

Most economists believe the economy is about flat in the current quarter.

On the dollar, the Treasury secretary scolded business leaders that have been critical of the greenback's strength.

The National Association of Manufacturing, for instance, sent a letter earlier this year to O'Neill complaining of the brawny dollar's impact on exports.

"Great companies do two things: they perform in such a way that what the relationship is between the U.S. dollar and other currencies doesn't matter, they make it irrelevant," he said. "And for those that can't figure out how to be so good that it's irrelevant, they hedge it."