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US officials bullish about growth
Treasury secretary Geithner and adviser Summers predict upturn in coming months.
Last Modified: 02 Aug 2009 21:39 GMT
The commerce department showed a contraction of 1.0 per cent - better than expected [EPA]

US economic growth is highly likely to resume in the second half of the year, senior US administration officials have said.

But Timothy Geithner, the treasury secretary, warned in an interview with ABC television on Sunday that once recovery was regained, there would be "hard choices" to contain rising deficits.

He said he would not rule out higher taxes in the future, adding: "We're going to have to do what is necessary."

Geithner and Larry Summers, the White House economic adviser, went on the Sunday television talk shows to make the case that the economic stimulus programme by Barack Obama, the president, was gaining traction, despite rising unemployment and worries about the US deficit.

Summers told NBC television: "A very great likelihood - and this is what most professional forecasters say - is that we'll see growth going forward in the second half of this year."

The two men were seconded by Alan Greenspan, the former chairman of the Federal Reserve, who told ABC the worst US financial crisis in a half a century was "not quite" over, "but we're getting there".

'Pretty sure'

Greenspan said he was "pretty sure" the broader US economy had hit bottom and begun to turn around in mid-July.

Summers pointed to the success of a "cash for clunkers" programme where motorists can trade-in old vehicles for a government payment against a new one as a sign that the US car industry was coming back to life.

He said industries will have to replace inventories that have been massively cut.

But both he and Geithner acknowledged that the US jobless rate would continue to climb from its current level of 9.5 per cent.

Geithner cited private analysts as saying the rate will not start coming down until the beginning of the second half of 2010.

Gross domestic product figures released on Friday by the commerce department estimated that the US economy contracted 1.0  per cent 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 programmes were working.

Source:
Agencies
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