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    Snow insists inflation is 'well under control'
Simon Kennedy and Suzy Assaad
2004-06-07 06:47

US Treasury Secretary John Snow said the country's economy will continue to strengthen and generate new jobs without sparking inflation.

In an interview after the Labor Department reported that US employers had added 248,000 workers to their payrolls in May, Snow said the ninth consecutive month of jobs gains reflected a rebounding economy and anticipated further gains in coming months.

"The American economy is in a strong, broad-based recovery," Snow said. "We'll continue to have good jobs numbers for the foreseeable future."

Job gains since the end of last year are evidence that companies have regained the confidence that was missing earlier in the recovery that began in November 2001, economists said. Rising wages may keep consumers spending and ensure that the economy continues to expand for the rest of the year, he said.

Expansion can occur without causing inflation because unemployment remains at 5.6 per cent, factories have the capacity to bolster production and productivity remains strong, Snow said.

"Inflation continues to be well under control," he said. "Inflation is not a major concern."

While this year's 19 per cent jump in oil prices is "unwelcome" and is boosting prices for consumers and businesses, Snow forecast prices will come down after Friday's decision by the Organization of Petroleum Exporting Countries (OPEC) to raise production quotas by the most in more than six years. Crude prices reached a record US$42.45 a barrel on Wednesday in New York.

"The recent actions by OPEC are helpful," Snow said. "They point in the right direction and should help to moderate the situation. These prices will come down over time. They're not going to take us off the strong growth path."

Snow said the economy is also lifting government revenues.

"Tax receipts are running ahead of projections, and that's good news for the deficit," Snow said. The Bush administration expects a record budget shortfall of US$521 billion this year.

Commerce Secretary Donald Evans said the employment gains last month show how much better off the US economy is now compared with a year ago. "We really weren't seeing job creation a year ago. Since August, we've now added 1.4 million jobs. It's the last indicator to really turn positive," Evans said.

(China Daily 06/07/2004 page12)