Treasury secretary Tim Geithner argues Tuesday in The New York Times that, despite continued anxiety about the economy, recent reports show good signs. Recovery is tough, but we are well on our way. Here are the key elements of the argument:
DESPITE ANXIETY, GOOD ECONOMIC NEWS
While the economy has a long way to go before reaching its full potential, last week's data on economic growth show that large parts of the private sector continue to strengthen. ... As the economists Ken Rogoff and Carmen Reinhart have written, recoveries that follow financial crises are typically a hard climb. That is reality. ... But despite these challenges, there is good news to report:
Private job growth has returned--not as fast as we would like, but at an earlier stage of this recovery than in the last two recoveries. Manufacturing has generated 136,000 new jobs in the past six months.
ON PRIVATE SAVING
American families are saving more, paying down their debt and borrowing more responsibly. This has been a necessary adjustment because the borrow-and-spend path we were on wasn’t sustainable.
ON THOSE BANKS
Major banks, forced by the stress tests to raise capital and open their books, are stronger and more competitive. Now, as businesses expand again, our banks are better positioned to finance growth.
WHAT THE WHITE HOUSE AND CONGRESS DID RIGHT
According to a report released last week by Alan Blinder and Mark Zandi, advisers to President Bill Clinton and Senator John McCain, respectively, the combined actions since the fall of 2007 of the Federal Reserve, the White House and Congress helped save 8.5 million jobs and increased gross domestic product by 6.5 percent relative to what would have happened had we done nothing. The study showed that government action delivered a powerful bang for the buck, and that the bank rescue on its own will turn a profit for taxpayers.
WHERE TO GO FROM HERE
Congress should move now to help small business, to assist states in keeping teachers in the classroom, to increase investments in public infrastructure, to promote clean energy and to increase exports. And while making smart, targeted investments in our future, we must also cut the deficit over the next few years and make sure that America once again lives within its means.
These are considerable challenges, but we are in a much stronger position to face them today than when President Obama took office.