–Higher Gas Prices Putting More Pressure on Working Families
–Broad Agreement Between Both Parties on Scale Of Deficit Reduction

By Brai Odion-Esene

WASHINGTON (MNI) – The U.S. economy is recovering and gaining in
strength, Treasury Secretary Timothy Geithner said Thursday, despite
data indicating a drop-off in the pace of economic expansion during the
first quarter.

Although the U.S. GDP is estimated to have risen at a seasonally
adjusted annual rate of 1.8% in the first quarter — a significant
slowdown from the 3.1% increase in the fourth quarter 2010 — Geithner
highlighted the fact the economy grew for the seventh straight quarter.

“This is still a very tough economy for millions of Americans …
but even with the many challenges we face, the economy is healing and
getting stronger,” Geithner said in remarks prepared for delivery to the
Detroit Economic Club.

He stressed that the private sector is leading the expansion, and
cited continued efforts to boost investments and hiring even as
government spending declines.

However, acknowledging rising headline inflation that many believe
is responsible for the slower rate of growth in the first quarter,
Geithner acknowledged “higher gas prices are putting more pressure on
the average working family,” with the damage “much more severe” than
national averages indicate.

Still, the underlying trends show the fundamental strength and
resilience of the American economy, he said.

It is important for policymakers now to focus on strengthening
economic growth, reinforcing the repair and recovery process while also
bolstering long-term fundamentals for future growth, he said.

Geithner’s bullish outlook also extended to the U.S. fiscal
situation, despite continued skepticism outside the Beltway, saying
there is “broad agreement” between both Republicans and Democrats on the
scale of deficit reduction required.

“So our objective is to try and take advantage of this present
moment and build a bipartisan consensus,” he said. “Our deficits are too
high … and left unaddressed they will hurt future economic growth.

“This is going to be a formidable challenge for us. But it is a
manageable challenge for the United States,” he said.

Geithner also noted that the U.S. is well on the way towards
meeting its core objective of once again establishing its financial
system as the strongest in the world “far ahead” of other nations that
were caught up in the financial crisis.

He also trumpeted the government’s successes reaped from its series
of bailouts, predicting a positive return of “billions of dollars” from
its bank rescues.

“That means if you take all the Fed Reserve emergency programs, all
the losses in the GSEs, all the investments we made in the banking
system, automobile industry and insurance sector, the total costs will
be very modest, well under 1% of GDP, or roughly a third of the cost of
the much less severe S&L crisis,” Geithner said.

** Market News International Washington Bureau: 202-371-2121 **

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