Geithner Says Chances of Double-dip Receding

Nov. 8, 2010
He noted that productivity growth had been excellent, auguring well for future expansion, but that parts of the U.S. economy 'still look very tough' with unemployment and the housing market still bad.

Treasury Secretary Timothy Geithner said on Nov. 8 that the economy was starting to pick up and that chances of a "double-dip" recession were lower than at any time in the last 12 months.

"Things are gradually getting stronger in the U.S.," Geithner told a business audience in New Delhi, where he was accompanying US President Barack Obama on an official visit.

"Chances of a double-dip recession look lower than they have been over the last three, six to 12 months," he said. "The risks are diminished.

"The basic tone of the numbers suggest some modest strengthening of growth," he said.

Geithner's comments came after figures earlier in the month showed the country experienced a mini-jobs boom in October, snapping a four-month streak of payroll losses. The Labor Department reported a surprising 151,000 non-farm jobs were added in October, although the addition was too weak to dent the high unemployment rate which remained unchanged at 9.6% for the third month in a row.

The U.S. has recovered once from recession, but economists have expressed fears it could again begin contracting -- known as a "double-dip" recession.

Geithner said productivity growth had been excellent, auguring well for future expansion, but that parts of the U.S. economy "still look very tough" with unemployment and the housing market still bad.

The treasury secretary did not comment directly on the Federal Reserve's decision last week to pump an extra $600 billion into the economy to bolster the nascent recovery, saying it was an independent financial institution.

A series of countries including China, Germany and Brazil have slammed the decision, and accused the Obama administration of trying to devalue its way back to prosperity.

But Geithner said countries make two types of mistakes in tackling financial crises. The first, he said, was to wait too long before seeking to resolve the problems, which he said was a "costly mistake."

The second error was to "let the momentum of recovery" fade too early in the process of recovery and "shift to more restraint too quickly."

"That second type of mistake can be very costly because it can prolong the recession and make it much harder to repair the damage," he said.

At a news conference earlier Obama defended the Federal Reserve's action, saying "the worst thing that could happen to the world economy, not just ours... is if we end up being stuck with no growth or very limited growth."

Copyright Agence France-Presse, 2010

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