Officials see US economic growth in 2nd half
NEW YORK; Top administration officials said Sunday US economic growth is highly likely to resume in the second half of the year, following a narrower-than-expected contraction in the second quarter.
"The great, great likelihood is that we'll see growth going forward in the second half of the year," White House economic adviser Larry Summers said in an interview with NBC television.
Summers and Treasury Secretary Timothy Geithner went on the Sunday talk shows to make the case that President Barack Obama's economic stimulus program was gaining traction despite rising unemployment and worries about the US deficit.
They were seconded by former chairman of the Federal Reserve, Alan Greenspan, who told ABC television the worst US financial crisis in a half a century was "not quite" over, "but we're getting there."
Greenspan said he was "pretty sure" the broader US economy had hit bottom and begun to turn around in mid July.
Summers supported his prediction of resumed economic growth in the second half, saying industries will have to replace stock that have been massively cut back and pointing to the wild success of a "cash for clunkers" program to stimulate the auto industry.
But both he and Geithner acknowledged that the US jobless rate will continue to climb from its current level of 9.5 percent. The treasury secretary cited private analysts as saying it will not start coming down until the beginning of the second half of 2010.
"You are right that there are signs the recession is easing. And if you think about where we were at the end of last year -- we had an economy in freefall, a financial system on the verge of collapse," Geithner said on ABC.
"But I think we have a ways to go," he added. "I want to emphasize the basic realities. Unemployment is still very high in this country. We need to make Americans more confident about their future."
The latest ray of light in the economic storm were new gross domestic product figure released Friday by the Commerce Department, which estimated that the US economy contracted 1.0 percent in the second quarter, better than forecasters expected.
The administration said the new report showed the economy was in deeper trouble than believed when Obama took office but that its recovery programs were working.
"What you're going to see first is growth turn positive," Geithner said. "And then you're going to see the pace of job losses slow materially for the -- they have already slowed significantly, as you said. They're going to slow materially further."
Asked about the possibility of a "double dip" in the recession, Geithner said the administration was focused on that possibility but did not see it as a risk at the moment.
"Again, we need recovery to be built on private demand, private spending, businesses taking a chance again in the American economy, putting investments to work, starting to rebuild their employment base," he said.
"That's the ultimate test for recovery. And the very important thing for us is to make sure we're sticking with this until we're very confident we have a strong, private sector-led recovery in place," he said.