US Treasury Secretary dismisses fears of double dip recession

US Treasury Secretary Timothy Geithner dismissed fears of a double dip recession in an interview aired yesterday, but warned of a slow US recovery with the economy only gradually gaining strength.

Mr Geithner was asked on NBC's Meet the Press"whether he thought the economy would dip back into recession before things got better.

"No, I don't," he answered.

"I think the most likely thing is, you see an economy that gradually strengthens - over the next year or two. You see job growth start to come back again," Mr Geithner said.

"Again, investments expanding, manufacturing get a little stronger, exports better. Those are very encouraging signs."

However, he said there was still a long way to go and Americans were understandably cautious about the future.

"We're living still in a lot of challenge... 'cause the scars of this crisis ran so deep," he said. "And I think most Americans understand it's going to take some time to heal this."

Mr Geithner was pressed on whether, in light of the poor prospects for growth and high unemployment, President Barack Obama's 787 billion dollar Recovery Act had been sufficient to lift the economy.

"There is a lot of stimulus still in the pipeline," he said.

"And we've got some long-term fiscal problems, they're going to be a challenge for the rest of the country. And we're going to work to fix those problems we inherited, but the best way to do that is to make sure we're growing, private investment starts to come back, private firms start to hire again.

"The government can help, but we need to make this transition now to a recovery led by private investment," he told NBC.

The White House has said the stimulus has created up to 3.6 million jobs, but the Federal Reserve has forecast worse-than-expected growth and unemployment, currently at 9.5 per cent, for the rest of this crucial congressional election year.

The US government on Friday lowered its 2010 federal budget deficit estimate by 84 billion dollars to 1.471 trillion dollars on projected spending declines.

That would still be a record-high deficit amid massive government spending to pull the economy out of the worst recession in decades.

The new deficit estimate amounts to 10 per cent of gross domestic product, down from 10.6 per cent of GDP in previous estimates for fiscal 2010, which ends September 30.