Geithner Says U.S. Employers `Very Cautious,’ Job Growth Not Fast Enough

July 25, 2010

Ian Katz, Bloomberg News

Treasury Secretary Timothy F. Geithner said U.S. companies scarred by the financial crisis remain “very cautious” and are trying to get more productivity from current employees before hiring new ones.

Job growth is “not as fast as we need,” Geithner said in an interview taped for broadcast today on NBC’s “Meet the Press” program. Employers “are still cautious, still very cautious,” he said. “So they’ve been trying to get as much productivity out of their employees as possible.”

The U.S. economy lost 125,000 jobs in June while adding 83,000 private-sector positions, fewer than forecast. While the unemployment rate fell to 9.5 percent from 9.7 percent, it has exceeded 9 percent since May 2009.

Geithner said he doesn’t think the U.S. will suffer a so- called double-dip recession. “The most likely thing is you see an economy that gradually strengthens over the next year or two,” he said.

Companies announcing job reductions in July include New Brunswick, New Jersey-based Johnson & Johnson. The health- products company, under U.S. congressional investigation for a recall of children’s medicines, said it will reorganize the plant where the withdrawn drugs were made and cut 300 positions.

Geithner said he thinks the government should keep a role in housing finance companies Fannie Mae and Freddie Mac while studying how much U.S. policy should encourage homeownership.

‘Carefully Designed Guarantee’

“We’re not going to preserve Fannie and Freddie in anything like the current form,” he said. “But I think there’s going to be a good case for taking a look at preserving or putting in place a carefully designed guarantee, so again, homeowners have the ability to borrow, to finance a home, even in a very difficult recession.”

The administration will look at the “the broad set of policies” the U.S. government has put in place “to help encourage homeownership and particularly help low-income Americans get access to affordable housing,” he said.

Falling home prices, together with easy availability of credit and government policies promoting homeownership, pushed Fannie Mae and Freddie Mac to the brink of collapse in 2008. The Treasury seized them in September of that year and has spent $145 billion so far to keep them solvent. In April, government agencies asked for public comment on how to fix the system.

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