The State of the Global Economy: A Conversation with Secretary of the Treasury Tim Geithner
The U.S. economy is gradually healing, gradually getting stronger. Growth has averaged about
2.5 percent since the recovery began, slower than the average of recoveries in the post-war period. Why has it been so moderate? Really,the following reasons: one is the basic reality that when you’re digging out
of a financial crisis caused by too much borrowing, too much leverage,and the economy built too many houses, you face a lot of headwinds as you work through those imbalances and that makes growth slower than it
would normally be. Because people are bringing down debt, saving more,spending less, and they’re naturally more cautious in that context. That’s very important to understand, and the paradox in that is that the weakness
that induces temporarily should be a source of strength going forward.And as you know and many people have written, we’re much further along in that adjustment process than are many countries, so we’ve brought
down risk in the financial sector quite dramatically. You know, we’re four years into the adjustment in housing, and even individuals are bringing down their debt levels quite a bit. So, that’s good.
We also got hit by a series of pretty substantial external shocks in 2010 and ‰. Europe’s cris
is, Japan and oil; those are large enough to bring down the rate of growth quite significantly in the United
States. And then we had, of course, the debt limit drama of last summer which was very damaging to consumer confidence at a time when the world was very fragile.
Those are the main reasons why recovery has been more moderate than you might have thought, just thinking about an economy coming out of this crisis. But we’re making quite a bit of progress. We’re in a much stronger position than we were six months, a year, eighteen months, two years ago.
And if you look at the basic indicators of economic strength in the United States, what’s encouraging about it is that the strength is pretty broad based. You see it in manufacturing, in high-tech, agriculture, energy. Private investment growth has been pretty strong, actually. Even job creation in the private sector has been relatively strong since the re-start, and export growth is pretty good, and productivity measure is pretty
Where there’s weakness, still, in housing and construction ...http://www.brookings.edu/~/media/Files/events/2012/0418_geithner/20120418_geithner.pdf