Washington  - The US economy is "beginning to improve" President George W Bush said Saturday, and was confident the 152- billion-dollar stimulus package signed earlier this year would ward off a recession.

The housing market was still facing tough times, but the decline in home sales had levelled off, Bush said in his weekly radio address, and the economy grew 3.3 per cent in the second quarter, beyond analysts' expectations.

"These welcome signs indicate that the economic stimulus package that I signed earlier this year is having its intended effect.

"The growth package will return more than 150 billion dollars back to American families and businesses this year."

Bush also urged Congress to work together on a "comprehensive approach" to solving the nation's energy problems, by "lifting the ban on offshore drilling ... and implementing long-term tax credits to spur the development of alternative sources of energy."

He said Congress might find it difficult to focus on legislative issues during this "election season."

"In the coming months, it will be tempting for some in Congress to try to score political points instead of getting work done for the American people ... We still have time to accomplish important goals for our country."

Among those, he included the approval by Congress of free trade agreements with "strong allies" like Colombia, Panama and South Korea, and the opening up of markets for American goods.

Democratic presidential hopeful Barack Obama's campaign was quick to respond: "When it comes to being out of touch with what middle- class Americans are going through, George Bush and John McCain are two of a kind."

"The economy has lost jobs each of the last seven months, and over the past seven and a half years, job growth has been weaker than in any economic expansion on record," campaign spokesman Bill Burton said.

"Inflation reached a 17-year high. This month we learned that prices jumped 5.6 per cent in July over a year earlier. That is the largest year-over-year increase in inflation since January 1991, when the economy was in recession," the statement said. (dpa)