Geithner Says Unemployment May Peak in Second Half of 2010
The U.S. unemployment rate may not peak until the second half of 2010, possibly necessitating another extension in unemployment benefits, U.S. Treasury Secretary Timothy Geithner said.
“I think that is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said in an interview today on ABC’s “This Week” program.
The U.S. economy contracted at a better-than-forecast 1 percent annual pace in the second quarter, the Commerce Department reported July 31. Stabilization of housing markets and consumer spending, a lessening of financial turmoil and increased government spending all suggest the longest recession since the 1930s may be close to ending.
“There are signs the recession is easing,” Geithner said. “The broad consensus of private forecasters is that you are going to see positive growth in the second half of this year and expect that to continue.” Still, it is “not clear yet” how strong growth will be.
Lawrence Summers, director of the White House National Economic Council, said that while the economy will resume growth in the second half of the year, the job picture “will be serious for some time to come.”
“We have walked back from what we were facing six month ago,” Summers said on NBC’s “Meet the Press” today. “It’s going to take time before you see it in the unemployment rate.”
‘Do What’s Necessary’
Summers said the Obama administration will work with Congress to “do what’s necessary to make sure appropriate unemployment benefits are available.”
Congressman Charles Rangel, chairman of the House Ways and Means Committee, said he supports extending unemployment insurance benefits for another 13 weeks.
“There’s no question, they deserve it,” he said on Fox News Sunday. “They are the true victims of this fiscal disaster.”
Senator Jim DeMint, a South Carolina Republican, said he’ll “definitely support” extending unemployment benefits cashadvance.
Economic growth will average 1.5 percent in the July- to-December period, according to a Bloomberg News survey of economists in July.
“You are going to see the pace of job losses slow materially,” Geithner said. “Again most private forecasters, let’s use their judgment, suggest you’re going to see unemployment start to come down maybe beginning in the second half of next year.”
Teachers, Police Officers
Summers said less than 10 percent of President Barack Obama’s economic stimulus plan goes to job creation in 2009, with most new jobs coming later. He said the administration still expects the stimulus to save or create at least 3 million jobs, and pointed to teachers and law enforcement officers who kept jobs because of the additional funding.
The problem, he said, was that the economy was in worse shape last year than many economists thought.
“Unemployment increased more than almost anyone expected,” Summers said. “Businesses were more scared than we realized and were much quicker to lay people off.”
Fed Chairman Ben S. Bernanke predicted a week ago the U.S. unemployment rate will top 10 percent, up from 9.5 percent in June, even as the economy recovers from the worst recession in at least five decades. Growth of about 1 percent is likely in the second half of the year, Bernanke said at a town-hall-style meeting.
Geithner said once the recovery is established, the administration will focus on reducing government budget deficits.
“Recovery will not be strong enough to sustain unless we can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established,” he said.