As provincial and territorial finance ministers sat down for meetings with their federal counterpart on Thursday, Jim Flaherty tried to ease the public's worries about the economy.

A Harris-Decima for Investors Group survey suggested that consumer confidence is at its lowest level since the fall of 2001.

Flaherty told CTV Newsnet's Mike Duffy Live Thursday evening that economic problems south of the border are having a negative impact on the Canadian economy.

"Certainly, there's a recession in U.S. housing. Unfortunately, that affects Canada quite dramatically, particularly in the auto sector and in the forestry sector. Canada is not an island," the federal finance minister said.

But Flaherty also said Thursday that he's optimistic about the Canadian economy.

He told CTV's Canada AM earlier that Canadians are becoming worried about their own economic situation because they're watching media reports about what appears to be a declining U.S. economy.

"I encourage Canadians to look at home here at how well we're doing with our solid economic fundamentals and have confidence in our economy here in Canada," Flaherty said.

Statistics Canada will release Canada's quarterly growth number on Friday -- a figure most economists predict will jump by a meagre 0.5 per cent.

The forecasted growth is half of what the Bank of Canada projected earlier this year.

Flaherty said he's still "comfortable" with his forecast for economic growth of 1.7 per cent in 2008.

Flaherty will meet with the finance ministers over two days to discuss economic issues such as a national securities regulator and internal trade barriers.

The finance minister said the ministers will also discuss the "collective responsibility" of all levels of government to help grow the economy.

Additionally, Flaherty said Ottawa is still trying to achieve a 25 per cent business tax rate overall.

"Most of the provinces are moving in that direction together with the federal government," he said on Canada AM.

However, Ontario and Quebec favour grants for troubled sectors to encourage companies to locate in their provinces.

Flaherty said he was encouraged that Ontario Premier Dalton McGuinty has been talking about lowering business taxes in the last few weeks.