Treasury Secretary Paul O'Neill said on Monday the attacks by hijackers on Sept. 11 that left thousands dead or missing could delay recovery in the world's top economy by a ``quarter or so.'' 

Continuing a campaign to rally public confidence, O'Neill said Americans should try to resume their normal lives and suggested the government must carefully calibrate how much stimulus it now adds to the economy. 

As Congress and the White House weigh measures to boost the economy, which is expected to take a stiff short-term knock from the attacks, it was vital not to sow the seeds of future inflationary pressures that might force the Federal Reserve to push interest rates up, O'Neill said. 

``We think that the underlying future of our economy is very good, that in the foreseeable future we will return to a real rate of growth of over 3 percent and it may be delayed a quarter or so from what we had earlier hoped, but the fundamental factors are out there,'' O'Neill said in a webcast conference call with U.S. Chamber of Commerce members. 

``The inventory liquidation that was necessary to the correction we were in has proceeded at a good pace.'' 

NEED TIME TO GAUGE IMPACT 

O'Neill said in another week or 10 days, it should be apparent ``how big, if any, a stimulus should be and then we can better address the question of what form it should take.'' 

He said President Bush was ``very wary of taking action quickly in the name of haste and then regretting it two or three months from now.'' 

O'Neill added that there was no question about the need to provide aid to U.S. airlines, hard hit by interruption to their service and the potential cost of new security measures, but the Bush administration had to be wary about other interests trying to cash in by seeking taxpayer help. 

There has to be ``balance between providing stimulus on the one hand and possibly on the other hand creating an inflationary situation that causes the Federal Reserve to clamp down and slow down the economy,'' the Treasury chief said. 

Congress is mulling a number of possible stimulus measures including capital gains tax reductions. Last week, both O'Neill and Fed Chairman Alan Greenspan, testifying before Congress, urged lawmakers to go slowly while policymakers assess the impact of the attacks on economic activity. 

At this time, O'Neill said the most important thing for people to do was to get on with their lives, running their businesses and farms as normally as possible to help get past the shock of the attacks. 

``We're going to do it with an aching heart but we need to get back to regular economic activity,'' O'Neill said. 

That will boost the odds of getting the economy back on track. ``We will recover, we will persevere and we are convinced we will prevail,'' O'Neill said.