US Treasury Secretary Timothy Geithner said the GDP figures released on Thursday were “encouraging,” but that it would be up to the private sector to turn one quarter of positive growth into a sustainable recovery.
In a speech in Chicago, Geithner said the economic figures reflected a broad-based recovery, though he warned it was still “early” in the process.
The quarterly results were “broad and strong,” he said in remarks to the Economic Club of Chicago. “It wasn’t just cash for clunkers and it wasn’t just the direct effects of stimulus. You saw consumption stronger, investment stronger, housing, construction stronger, exports rising quite rapidly.”
In percentage terms, the US economy grew at a seasonally adjusted 3.5 percent annual rate in the July-September period from the previous quarter.
The growth exceeded analyst expectations and marked the strongest quarter since the third quarter of 2007 when a US subprime mortgage crisis triggered a global financial meltdown.
Geithner said the administration of US President Barack Obama could not “borrow and spend” its way to prosperity and was looking to the private sector — specifically exports and private investment — to drive the economy going forward.
The administration’s job is to provide the right environment and incentives for further growth, he said.
The economy has “stabilized,” Geithner said, in that there has been a significant improvement in confidence in the financial system and most large businesses are able to access the credit they need. But he conceded some sectors were still hurting.
“If you are a small business, if you are in parts of the economy affected by the crisis, it’s still very difficult. You are affected by the classic risk of the credit crunch slowing the pace of recovery,” he said.
As such, “we’re going to have to make sure we’re leaning against those financial headwinds because we don’t want to see those weaken the recovery,” he added.
Looking ahead, he said the Obama administration has to be aggressive about reducing deficits to avoid the specter of rising interest rates, which could choke off private investment.
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