Tags: Geithner | Growth | Jobs | economy

Geithner: Dismal 2% Growth Can't Create Enough Jobs, Sustain Recovery

Thursday, 14 June 2012 11:44 AM EDT

The economy isn't growing fast enough to create the number of jobs the country needs to achieve a stronger recovery, says Treasury Secretary Tim Geithner.

President Barack Obama grabbed headlines recently when he said the private sector was "doing fine," which drew criticism in light of dismal monthly jobs reports and tepid growth rates.

“It is a very tough economy still ... growth not as strong as we would like,” says Geithner, speaking at the Council on Foreign Relations, The Hill reports.

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

The economy added 69,000 jobs in May, which brought the unemployment rate up to 8.2 percent from 8.1 percent in April.

The country's gross domestic product grew 1.9 percent in the first quarter, down from an initial estimate of 2.2 percent.

"Most forecasters look at the American economy and they say [it will] grow at roughly a 2 percent rate. ... That is not strong enough to bring down the unemployment rate faster," Geithner says.

Geithner urged Congress to pass jobs measures proposed by President Obama, such as increased infrastructure and education spending and extending expiring middle-class tax cuts.

Tax cuts are due to expire at the end of this year, while automatic spending cuts are set to kick in at the same time, a combination known as a fiscal cliff that could siphon hundreds of billions of dollar out of the economy and possibly throw the country back into recession.

Both Democrats and Republicans need to focus on long-term solutions to fiscal matters.

"We need to ... force this town to confront and take on the things that divide us on these long term fiscal reforms, so that we can go ahead and govern, and start to address the many other problem this country faces," the Treasury secretary says, this time reported by CNBC.

Well-known market observers, meanwhile, worry if the United States is growing too slowly.

The U.S. economy is healing but not growing fast enough to achieve escape velocity and break free from the pull of a fresh slowdown, says Mohamed El-Erian, CEO of Pimco, manager of the world's largest bond fund.

Like a plane that is flying too slowly, the economy may be in the air for now but if it doesn't generate enough lift, down it goes.

"The bottom line is unfortunate, but it must be acknowledged. While the U.S. economy is gradually healing, a lot more needs to happen – indeed, urgently – to restore its traditional vigor and vitality. Most important, robust recovery requires a degree of seriousness and constructive collaboration in Washington that seems elusive today," El-Erian writes in a recent Project Syndicate column.

"Unless and until this cooperation materializes, the hope of achieving economic escape velocity will remain just that – a hope. And, rather than surging forward, the U.S. economy, regrettably and exasperatingly, will remain captive to unusual sluggishness, while its vulnerability to the ill winds blowing from the rest of the world will only increase."

Editor's Note: You Deserve to Know What Obama and Bernanke Are Hiding From Americans

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Thursday, 14 June 2012 11:44 AM
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