US economy into strong recovery: John Snow
Updated: 2005-08-06 14:45
The stronger than expected July jobs report shows the U.S. economy is "clearly into a good, strong recovery," and interest rates are likely to keep rising given the economy's continued strength, Treasury Secretary John Snow said Friday.
The Labor Department reported earlier Friday that nonfarm payrolls rose by 207,000 in July, the biggest increase in three months and larger than the 180,000 rise Wall Street had expected.
"This report today reinforces the fact that the American economy is on a very good course. It's good news that is going to continue. The fundamentals remain very, very strong," Snow said in an interview with Fox News.
Asked in a separate interview with MSNBC about the interest-rate outlook given the rise in 10-year Treasury yields following the jobs report, Snow said rates are likely to head higher. The 10-year yield hit 4.39 percent earlier Friday, its highest level since mid-April.
"In the past we've always seen some increase in interest rates coinciding with the stronger economy. That's clearly to be expected with a strong, growing economy as this one is," Snow told MSNBC.
The Federal Reserve has raised the federal funds rate by a quarter of a percentage point at each of its last nine policy meetings. The rate now stands at 3.25 percent and financial markets widely expect the Fed to raise it to 4 percent by the end of the year.
In an interview with CNN, Snow was asked to comment on China's CNOOC Ltd.'s decision on Tuesday to drop its bid to acquire California-based Unocal Corp. Specifically, Snow was asked whether U.S. manufacturers may face any retaliation in the wake of CNOOC's decision.
"I don't anticipate any direct effects here because, after all, CNOOC took the decision to withdraw their bid on their own," Snow said.
CNOOC's attempt to acquire Unocal spurred concerns among members of Congress, who recently added wording to energy legislation requiring a 120-day review of China's energy demands before the CNOOC deal could close. The White House already was planning a review of the economic and national security implications of the CNOOC-Unocal deal.
"The important thing here is that we build a constructive relationship with China and with our other trading partners. We are the most open economy in the world. It's important that other large economies around the world, other trading partners, open their economies up and play by the rules," Snow said.
Asked whether the U.S. needs a policy on how to proceed in cases when companies controlled by foreign governments seek to purchase U.S. companies, Snow said the U.S. has a process, referring to the federal Committee on Foreign Investment in the U.S., which the Treasury chairs.
The committee was initially formed to determine whether a foreign company's purchase of all or part of a U.S. concern would threaten U.S. national security.
"We have a process that on a case-by-case basis carefully reviews, carefully scrutinizes, any transaction that could pose any risk to the security interests of the United States," Snow said.