U.S. Treasury Secretary Henry Paulson has said the U.S. economy and the markets are strong enough to absorb the losses of market turmoil without provoking a U.S. recession, The Wall Street Journal reported Thursday.

 The market turmoil occurs "against a backdrop of a very healthy global economy with strong fundamentals," Paulson said in an interview with the newspaper in his office, admitting the turmoil "will extract a penalty on the growth rate" of the U.S. economy.

Reflecting on a 32-year career on Wall Street, Paulson said, "Looking over periods of stress that I've seen, this is the strongest global economy we've had."

Some funds or businesses may go under and the "adjustment" in financial markets is likely to continue, the former Goldman Sachs Group Inc. chief executive was quoted as saying, but he emphasized that he expects the U.S. economy to keep growing nonetheless.

Paulson's Wall Street background stands in contrast to the previous two Bush administration Treasury secretaries, who had been chief executives of industrial companies.

In August 2006, at an annual gathering of Bush and his economic advisers at the presidential retreat at Camp David in Maryland, Paulson outlined "the possibility of turbulence in markets and the reassessment of risk."

This year's session was held at the Treasury Department on Aug.8, just before markets tanked, according to the report.

Since then, Paulson has talked frequently by phone with Fed Chairman Ben Bernanke and other members of the President's Working Group on Financial Markets, Wall Street executives he knows from his past career and a couple of his counterparts in other countries, the report said.