The US economic slowdown is typically short and shallow and Washington's monetary and fiscal rescue packages will lift the economy, former US Treasury Secretary John Snow said.
Mr Snow, now chairman of Cerberus Capital Management, welcomed the Federal Reserve's emergency interest rate cut yesterday and said it was necessary.
Former US Treasury Secretary John Snow
"The United States economy is slowing rapidly and the last labour market report was quite negative and consumption is falling off, the housing market remains in trouble. There is tightness in the credit markets which unless it's fixed will close up worthy credit borrowers. So it's very serious," Mr Snow said.
"What yesterday's action shows us is the Fed is focused but they are aware of negative trends in the economy and prepared to take bold steps," he said on the sidelines of the World Economic Forum in Davos where more than 2,500 business and political leaders are gathering.
US President George W. Bush has called for a package of tax cuts and other measures totalling around $150 billion to prevent the world's largest economy from falling into a recession.
"Short and shallow, that's the pattern of an American slowdown. The combination of actions by the Fed and the stimulus package the administration and congress is working on together will give a lot of lift to the economy and that's needed because downward signs are very evident," Mr Snow said.