By Jeannine Aversa, AP Economics Writer
WASHINGTON (AP) — The Obama administration's No. 1 job right now is to rev up economic growth and get companies to start creating jobs again, Treasury Secretary Timothy Geithner said Thursday.
Geithner's remarks come as the White House convenes a summit to explore new ideas to help put Americans back to work. Nearly 16 million are currently unemployed, and the jobless rate is at 10.2%, a 26-year high.
"Our biggest challenge now is growth and bringing down unemployment," Geithner said in an interview on CNBC. "That's our overwhelming challenge. Nothing is possible without that."
A "classic mistake" governments have made in the aftermath of past crises is removing support too early before the economies are strong enough to stand on their own, he said.
After four straight losing quarters, the economy returned to growth in the July-September quarter, expanding at a modest 2.8% pace.
Going forward, the pace of the recovery isn't expected to be strong enough to prevent the unemployment rate from rising. Some private economists think it could rise as high as 11% by the middle of next year before slowly moving down. The Fed has said it could take five or six years for the job market to return to normal.
"The economy is healing," Geithner said. But he added: "We suffered this enormous trauma."
That damage — especially the loss of 7.3 million jobs since the start of the recession — will take time to fix, he said.
Once the economic recovery is firmly planted, the administration can shift its strategy to bringing down the nation's record-high budget deficit. Red-ink hit a staggering $1.42 trillion in the 2009 budget year than ended Sept. 30.
Trimming the deficit "is not a 2010 story," Geithner acknowledged, saying it could be in 2011. To stabilize the situation, it would be good for the country to get the deficit down to 3% of gross domestic product in the medium term, he said. The 2009 deficit was 10% of GDP, the highest since World War II.
On other issues, Geithner said a soon-to-be issued government report will show that the U.S. will earn a "positive return" on the taxpayer-funded bailout of financial companies.
Geithner also said he was confident Federal Reserve Chairman Ben Bernanke would win Senate approval for a second term. Sen. Bernie Sanders, an independent from Vermont, has sought to block the Fed chief's confirmation. Sanders is angered by Bernanke's support of bailouts of financial firms.
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