NEW YORK — Treasury Secretary Paul O’Neill feels retailing’s pain.

While not hazarding a guess about when the economy will make an about-face and relieve the suffering, O’Neill, addressing the National Retail Federation’s board of directors here Tuesday, noted, “We see signs that the economy is improving, but the signs don’t give a clear indication that our rate of improvement will be as strong as we’d like it to be.”

Inventories in some industries are low, he noted, “a good sign for an imminent recovery,” while others see no prospects for new orders. “The signs are mixed, and growth forecasts reflect that — suggesting that we’ll have positive growth, but less than the 3-plus percent rate that we’d like to return to quickly,” said O’Neill, the former chief executive of Alcoa.

“The most important aspect in our economy, on a current basis, is the level of final demand you see,” he noted. “It’s not a lot of fun to live in a world without margins,” as is the case for many retailers facing the economic woes of recession, unemployment and, most immediately, depressed consumer spending.

“You will see some margin improvement going forward,” he reassured retailers, noting it would take only a small amount of demand to allow the strongest among the pack to perk up profit margins.

Times have been hard for the Government’s balance sheet as well, with the economic slowdown taking two-thirds of the budget surplus for the next two years. (Another 15 percent of the surplus went to tax cuts, while Sept.11 drained off about 20 percent.) Adjusting for a timing shift, O’Neill noted, corporate tax receipts have been down 40 percent quarter over quarter, reflecting only the slowdown in the economy since the tax package didn’t affect corporate taxes last year.

Preempting questions on a sales-tax holiday from retail executives in attendance, many of whom O’Neill noted were in favor of a holiday, he said the idea had been explored. “Let me reassure you, I heard you,” he said, but maintained the holidays “borrowed from the future” in states where they had been used. “You get increases, but not lasting increases,” he said.

Rather, the Cabinet member toed the Bush administration’s line on how to spur spending. “We will continue to push for tax changes that will increase business investment and job creation and put money in the hands of consumers,” he said.