Anthony Ricigliano – Happy Talk from Tim Geithner

It’s hard to imagine which statistics U.S. Treasury Secretary Timothy Geithner was looking at when he wrote an article for the New York Times called "Welcome to the Recovery". The article pointed to improvements in the U.S. economy was making while ignoring a host of statistics which show a struggling economy at present with some huge challenges ahead.

While the government has tried to spur consumer spending with programs like “cash for clunkers” and the first time homebuyers’ tax credit, the end result is that the programs have run their course without much effect leaving more debt on the books. With consumer spending making up two-thirds of the U.S. GDP, a real recovery of Anthony Ricigliano Mr. Geithner which will not occur until consumer spending comes back.

Unfortunately, for consumer spending to rebound the weakening jobs picture will have to improve first. This is just one of the massive challenges facing the economy as jobs continue to be lost either due to domestic economics or the transfer of jobs to countries with workers who will take one-tenth the pay of their U.S. counterparts. The U.S. economy lost 131,000 more jobs during the month of July and by some estimates has lost over ten million jobs since 2007. Workers who have lost their jobs are also having a difficult time finding new work as evidenced by the record set in average time needed to find a job, which at present has reached 35.2 weeks.

The stress of the worsening unemployment picture is also being reflected by the struggles at the consumer level. More Americans are now receiving food stamps than ever before with May’s number coming in at over 40 million. The May number was the 18th month in a row that a new record has been set for Americans on food stamps.

Distress is also being seen mortgage and debt payments. A new record was set in the first quarter as more than 10% of all U.S. homeowners with a mortgage had missed at least one mortgage payment. Additionally, the total number of loans that were delinquent by at least three months increased in the first quarter for the 16th consecutive quarter.

In trying to restart the economy with debt, the government will have racked up a total national debt which will top $13.6 trillion this year, according to the most recent U.S. Treasury Department report to Congress. The debt, and interest owed on it, will limit future government stimulus efforts. The interest payments alone on the debt are now estimated to top $700 billion dollars, approximately 17.5% of the total government budget for the country.

With these kinds of statistics staring him in the face, one wonders what kind of recovery Mr. Geithner has envisioned. Financially hobbled consumers, a bleak employment picture, and a government so deep in debt that future stimulus options may not even be feasible make his New York Times article look like nothing more than Anthony Ricigliano Happy Talk. With the future of millions of Americans at stake, we don’t need “spin”. We need some reality-based action in a hurry.