The Treasury chief also said Washington would work with its global partners to take steps aimed at averting future financial crises.

"The financial market turmoil and its impact on global growth underscore the need for all countries to remain open to trade and investment," Paulson said after a meeting here of finance ministers and officials from the Group of Seven major industrialized countries.

"We have worked, and will continue to work, closely to address global challenges and take concrete actions," Paulson said.

G7 officials endorsed a plan earlier Friday aimed at preventing a repetition of the recent financial market turmoil which has caused tens of billions of dollars of losses for major banks and securities firms.

"There may be more bumps in the road" for the US economy, Paulson cautioned.

The current slowdown in the world's biggest economy has been called a recession by the International Monetary Fund, an assessment dismissed by President George W. Bush's administration as "unduly pessimistic."

But it is clear that a persistent US housing slump and a related credit crunch have slowed US economic growth dramatically in recent months.

"I am confident in the long-term economic prospects of the United States," Paulson said. "However, the housing correction, together with high energy prices and financial market turmoil are weighing on US economic growth."

Paulson, a former chief executive of Goldman Sachs, said the US economy would likely get out of a first-quarter rut by later this year and possibly as early as the second quarter.

"The first quarter was a tough quarter," he told journalists at a press briefing.

A growing number of economists believe America's economy has already slipped into a recession.

Bush administration officials say a flurry of Federal Reserve interest-rate cuts and a giant 168-billion-dollar economic stimulus package should revive growth in coming months.

Paulson said the economy could benefit from "positive results" as early as the second quarter as it continues to weather stressed housing and credit markets.

He said some media headlines on the economy appeared to be overly bleak and stressed that America's economy is broad-based and dynamic.

Addressing reporters' questions about the foreign exchange markets and the weakened dollar, Paulson said G7 officials always debate currencies.

"I reiterated in very strong terms our commitment to a strong dollar," he said of his participation in the G7 finance meeting, adding that ministers also discussed other global currencies and their values.

The US dollar has weakened markedly on foreign exchange markets in recent months, partly due to aggressive Fed rate cuts.

Paulson also reiterated calls for Beijing to increase the flexibility of its yuan currency.

"As someone who has just got back from China, I believe that China understands ... it's in their interests, as they're are dealing with some of the issues they have ... to have a currency that's more reflective of underlying economic fundamentals," he said.

Some US economic commentators accuse China of keeping its currency artificially undervalued to support China's ballooning trade surplus with the United States.

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