Davos: In a candid admission of the problems plaguing the world's largest economy, US Treasury Secretary Timothy Geithner today said the country is seeing "very high levels of poverty and inequality".
Geithner's comments at the World Economic Forum (WEF) annual meeting here came on a day when the US government data showed that the country's economy grew 2.8 per cent in the last three months of 2011.
"... (there are now) very high levels of poverty in this country, very high levels of inequality and an erosion in peoples confidence in their (upward) mobility," Geithner said.
Pointing out that American economy is still repairing the damage caused by the devastating financial crisis; the Treasury Secretary said that people still have too much debt.
"Unemployment is still very high, housing and construction are still very weak...," he noted.
Presenting a cautious picture on the country's growth prospects, Geithner conceded that there are tremendous challenges and said it is "still very dependent on how the world unfolds".
The escalating European debt turmoil has cast a shadow on the global economy while the US economy is growing at a slower pace than expected.
According to Geithner, the US economy is expected to grow between two and three per cent this year.
"I think that's a realistic outcome as long as we don't see a lot of risks coming out of Europe," he said.
The Treasury Secretary also refuted perceptions that tough regulations are holding back economic growth.
"The reality does not justify that sense... Profitability across the American economy is very high, higher than the pre-crisis peak," he pointed out.
Private investment in equipment and software is up more than 30 per cent since the trough in the first half of 2009 and exports are up by 23 per cent, he added.
"I really do not think we could realistically deliver a better outcome for the American business sector.
"Although, we recognise that these reforms are tough and they will change the economics of business... There is no basis or evidence that the effects of these reforms are hurting growth now," Geithner said.
