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Geithner warns against ending economic stimulus measures too soon

'A classic pattern in past financial crises is governments tend to . . . withdraw support too early, and that's been a very costly mistake,' Treasury Secretary Timothy F. Geithner says.

October 16, 2009|Associated Press

NEW YORK — Treasury Secretary Timothy F. Geithner said Thursday that the economy was in the midst of a recovery that could be imperiled if the government's support systems were removed too quickly.

"A classic pattern in past financial crises is governments tend to put on the brakes too soon, withdraw support too early, and that's been a very costly mistake and we're going to be very careful to avoid that mistake," Geithner said at a conference sponsored by the Economist magazine.

A robust recovery depends on businesses investing more in the economy, Geithner said, and it is the government's responsibility to give them the tools to do that.

Despite signs of improvement, the recovery will be slow, the Treasury chief said.

"We've improved the prospects that we're not going to be consigned to a prolonged period of below-trend growth," he said.

But there will be a long period of adjustment as consumers save more and businesses work to improve their balance sheets, Geithner added.

"Realistically, it's going to be a slower than typical recovery," he said.

Geithner's comments come as the debate heats up over when the government should remove its fiscal stimulus programs and curtail its massive spending, and whether the economy will be strong enough to stand on its own once it does.

"Businesses across the country are still uncertain about how strong demand is going to be," he said. "If you don't make people confident that you're going to allow recovery to happen and become self-sustaining, then the risk is you're going to have weaker recovery."

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