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Paulson says U.S. housing correction "necessary" Steven C. Johnson WASHINGTON (Reuters) - A slump in U.S. homebuilding that slowed growth at the end of 2007 will help wring out excesses and the Bush administration is not trying to ward it off, U.S. Treasury Secretary Henry Paulson said on Wednesday. "After years of unsustainable home price appreciation, this is a necessary correction," Paulson said in prepared remarks for delivery to a real estate roundtable. A proposed fiscal stimulus package "is not intended or expected to slow down the housing correction," he added. Paulson said the housing downturn's impact was evident in the sharp deceleration in national economic growth to a 0.6 percent annual rate in the fourth quarter, which the Commerce Department reported earlier on Wednesday.
He spoke to the realtors, who greeted him warmly, minutes after the Federal Reserve announced it was slashing U.S. interest rates by an additional hefty half percentage point and cheered on the U.S. central bank's action. "Let me say I'm a big believer in what the Fed is doing, because I think monetary policy is an effective tool," Paulson said. But he added: "It's not the answer to everything", in a plug for support for a complementary fiscal stimulus package. Paulson said he was confident the U.S. economy will keep growing "although not as rapidly as we have seen in recent years," rather than stall into recession. SPEED OF THE ESSENCE Paulson praised the U.S. House of Representatives for voting to approve a package of fiscal stimulus measures worth about $146 billion and warned the Senate should similarly act quickly and keep the measures simple so they are effective.
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