U.S. economy to grow 2-3 pct in 2012: Treasury Secy
India Blooms News Service
Davos, Jan 27 (IBNS): U.S. Secretary of the Treasury Timothy Geithner on Friday said that he agrees with the consensus forecast that the United States economy will grow between 2 percent and 3 percent this year.
“I think that’s a realistic outcome as long as we don’t see a lot of risks coming out of Europe,” he told participants at the World Economic Forum Annual Meeting Friday in Davos, Switzerland.
“But we still face tremendous challenges,” Geithner conceded. America’s economic prospects are “still very dependent on how the world unfolds.”
“We’re still repairing the damage caused by the devastating financial crisis,” he said. “Unemployment is still very high, housing and construction are still very weak, people still have too much debt.”
Geithner admitted that there are now “very high levels of poverty in this country, very high levels of inequality and an erosion in people’s confidence in their [upward] mobility,” a startling admission for the world’s only remaining superpower.
But he denied that the tough regulations the US is imposing on the financial sector and the reforms in healthcare are holding back economic growth. “The reality does not justify that sense,” he insisted. “Profitability across the American economy is very high, higher than the pre-crisis peak.”
“If you look at investments as a measure of confidence, private investment in equipment and software is up more than 30 percent since the trough in the first half of 2009,” Geithner added. “Exports are up by 23%. There’s a broad-based strength in energy, in agriculture, in manufacturing.”
“I really do not think we could realistically deliver a better outcome for the American business sector,” he said. “Although we recognize that these reforms are tough and they will change the economics of business, we think the overall effect on the economy is certainly positive long term. There is no basis or evidence that the effects of these reforms are hurting growth now.”