Might more stimulus be needed? Not yet, says Geithner.
The Obama team won't seek another spending jolt for the US economy, the Treasury secretary said Sunday, until it assesses effects of the first one.
Despite some calls for a second fiscal stimulus package, the Obama administration has no immediate plans to ask Congress for another spending bill to help the American economy.Skip to next paragraph
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Instead, the administration says it will monitor the economy to see how much help comes from the $787 billion stimulus package enacted Feb. 17.
“We can’t make that judgment [to ask for more money] at this time,” said US Treasury Secretary Timothy Geithner, in answer to a question Sunday on CBS’s “Face the Nation.” “First we have to do with what we have.”
Mr. Geithner, expressing some optimism, cited progress in areas where the administration and the Federal Reserve have intervened so far. He specifically pointed to mortgage rates, which “are at their lowest point.”
On Friday, the rate on a conventional 30-year, fixed mortgage fell to 4.78 percent, down from 4.85 percent the previous week, said Freddie Mac, the government-run corporation that buys and guarantees mortgage loans. This is the lowest rate since Freddie Mac started keeping track of rates in 1971. A year ago, the rate for such a mortgage was 5.88 percent.
Geithner cited “encouraging signs” that the economy is starting to bottom out. But he warned that the economy, now in its fifth quarter of recession, would make progress in “fits and starts.”
This month, for example, 95 percent of working Americans will see a slight increase in their take-home pay as part of a reduction in the amount of money withheld for taxes, a provision of the fiscal stimulus package. Moreover, 55 million Americans living on Supplemental Security Income (SSI) or Social Security may qualify for a one-time $250 check to be mailed in late May.
At the same time, however, the unemployment rate is continuing to climb, hitting 8.5 percent in March, the Department of Labor reported Friday. That's the highest level since November 1983.
Geithner allowed that the unemployment rate may continue to rise. “Growth turns positive before unemployment peaks,” he said Sunday. “It’s a crude reality of recoveries.”
In the first three months of 2009, the nation lost 2 million jobs as businesses went into survival mode.
Because job cuts were so steep early in the year, there is hope among some economists that they will begin to slow in the second quarter.