Growing US economy will pull down jobless rate: Geithner
NEW YORK US TREASURY Secretary Tim Geithner said on Sunday said that US unemployment numbers, which stalled earlier this month, could resume their decline ahead of November’s election in which the economy will top voters’ concerns.
“If the economy keeps growing at a moderate pace, then, yes, more people will be back to work and you should see a gradual reduction in the unemployment rate,” Geithner told ABC television.
Speaking on the programme “This Week,” Geithner said it is “obviously still a very tough economy out there,” following the economic meltdown that occurred around the time his boss, US President Barack Obama, was entering the White House.
Geithner said the slow pace of the recovery is to be expected, given the depths to which the global economy had sunk.
“I think it’s not surprising, given the scale of the damage the crisis caused and how much damage you still see out there,” he said.
“But if you look at the evidence, the economy is getting stronger,” he said, again tempering his optimism however by adding, “we have a ways to go still, a lot of challenges still ahead.” New claims for US unemployment benefits rose for the second consecutive week after falling to a four-year low, official data showed last week in a report signaling a rise in layoffs.
The labour Department reported 380,000 initial jobless claims were filed in the week ended April 7, an increase of 13,000, or 3.5 percent, from the prior week’s upwardly revised estimate.
The number was the highest since January, but the overall trend in claims has been in retreat as conditions slowly improve in the troubled job market.
The US economy created only 120,000 jobs in March, much lower than the 200,000 forecast by economists.
The US economy is in a better position to deal with high gasoline prices, the treasury secretary said on Sunday, adding that unseasonably warm winter had lowered overall energy costs for consumers.
“The economy is in a much better position to deal with those pressures because natural gas prices are down, the overall cost of energy for consumers is down,” Geithner said.
A spike in gasoline prices caused economic growth to brake sharply in the first half of last year. Gasoline prices have risen 64 cents since the start of this year, leaving many Americans with a sense of deja vu, which was further reinforced by a slowdown in the pace of job creation last month.
However, Geithner said it was too early to tell whether the economy, which he described as getting stronger, would go through a repeat of last year.
“We can’t tell yet. Obviously, we’ve got a lot of challenges ahead and some risks and uncertainty ahead. And some of those risks are, of course, Europe is still going through a difficult crisis,” he said.
He also dismissed suggestions that the country’s huge budget deficit put it at risk of being the next Greece, adding that the challenge was to bring the deficit down without compromising economic growth.