NEW DELHI -- The U.S. economy could see a slight improvement in the second half of 2008 even though the first part of the year was going to be challenging, a senior U.S. Treasury Department official said on Thursday.

Speaking in the Indian capital, David McCormick, the Treasury's Under Secretary for International Affairs, said the second half improvement would be due to a fiscal stimulus of $150 billion, which would help create 500,000 new jobs in 2008. "Hopefully it will be an important stimulant to the economy," he said.

The International Monetary Fund expects U.S. economic growth to slow to 0.5 percent in 2008 from 2.2 percent last year. "We think in the case of the U.S. economy we are going to have a very challenging first part of the year. We hope we will begin to see a slight improvement in the overall economy in the back half of 2008," McCormick said.

"We will begin to see a slight improvement in the back half of 2008 and obviously carry that momentum in 2009. But make no mistake — a very challenging time for the economy."

A Reuters poll this week showed analysts' views that the U.S. economy nearly stalled in the first quarter and will shrink between now and June, but any recession was expected to be less severe than the last major downturn in the early 1990s.

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For the year, economists saw the U.S. economy expanding by 1 percent, below forecasts in March of 1.4 percent, although they predicted a rebound to 2.1 percent in 2009.

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