Paulson, in an interview with National Public Radio, said the US economy was shifting gears into a more sustainable pace of growth.

"I begin by looking at the underlying economy. And we are looking at a global economy now, and it's actually strong now for two or three years, and it's as strong as I have seen it any time during my business career," Paulson said.

He spoke as a fresh wave of selling hit Wall Street Friday afternoon as economic concerns resurfaced and investors retrenched ahead of the weekend break.

It marked the third day of losses in the past four sessions and followed Tuesday's global stock rout which triggered the worst slump in US shares since the aftermath of the September 11, 2001 terror attacks.

Investors have cited worries about US and Chinese economic growth as reasons for the rout.

"In the US, we are in the process of making what I believe is going to be a successful transition from the level of growth which was unsustainable to one that is quite sustainable," the former Goldman Sachs chief executive said.

Paulson conceded there were some signs of weakness affecting the US housing market and manufacturing sector, but said consumers were still showing resilience and that US exports were robust.

"Labor markets are in fine shape. Low unemployment levels, adding a lot of new jobs. So the economy is strong," the Treasury chief said.

"There is volatility in markets. Markets at any one time don't necessarily reflect the economic fundamentals in markets ... certainly don't move in a straight line one way or the other forever. So as long as you have markets, you're going to have volatility," Paulson added.