Treasury Secretary Henry Paulson says financial markets are “considerably calmer” now than they were two months ago. He predicts the economy will be rebounding by the second half of this year.

In remarks prepared for delivery to business executives Friday, Paulson characterizes housing troubles as still the biggest drag on the economy. But he says that risk will soon be lessened by nearly $100 billion in economic stimulus payments to U.S. households.

Paulson says the stimulus checks will support the economy as it weathers the housing correction, market turmoil and higher energy and food prices.