US Treasury Secretary Timothy Geithner says “it is going to take a while” for the economy to recover from recession while noting “important signs of some stability”.
He cited rises in consumer spending and easing credit conditions, but cautioned that “it took us a long time to get into this, and it’s going to take us a lot to get out of this still”.
“So these were important signs of some stability. They’re the necessary steps for recovery to begin but … this is going to take a while,” Geithner told public broadcaster PBS on Wednesday.
His comments came a day after Federal Reserve chairman Ben Bernanke said the US economy could rebound later this year, referring to recent data suggesting that the pace of economic contraction might be slowing.
However, Bernanke warned of more “sizable” job losses and a still fragile financial system.
Asked whether President Barack Obama’s administration agreed with Bernanke’s forecast of a recovery in late 2009, Geithner said: “It’s a good independent, credible forecast.
“So I would say there’s broader consensus now that that’s a reasonable expectation for the economy but, you know, (there’s) a lot of risk ahead, still.”
On foreign confidence in the economy, Geithner said investments continued to flow into the country despite the financial crisis.
“If you look at the last six months, last three months, the last year, at times when there was the greatest fear about the health and stability of the global financial system – and this is still happening today – money is generally flowing to the United States.”
Geithner admitted there was still “enormous uncertainty” across the economy, cautioning that “unemployment is going to keep rising for a while even as growth starts to recover”.
“The way recoveries work is unemployment will rise for a while,” he said.
The United States entered into recession in December 2007 following a home mortgage meltdown that triggered a credit crunch and financial turmoil across the globe.
US economic growth contracted by a massive 6.1 per cent in the first quarter of 2009 after a 6.3 per cent slide in the previous quarter but emerging government and private data clearly showed that the recession is easing.
Unemployment rose to a 25-year high of 8.5 per cent in March.