Geithner did not mention that the wages paid to these newly hired auto workers have been slashed by 50 percent, to only $14 an hour, barely above the poverty line. Nor that the strategy of the Obama administration, backed by the auto companies and the United Auto Workers union, is to make the US auto industry a successful low-cost competitor for its overseas rivals, both in Europe and Asia, including China.
The treasury secretary hailed the latest economic figures, although by any objective standard they were dismal: GDP growth of only 1.8 percent in the first quarter of 2011, and a jump in new claims for unemployment insurance.
Geithner said, "The economy is healing and getting stronger. Today's GDP estimate shows the economy grew for the seventh straight quarter."
He continued, "And it's important to note, the private sector is leading this expansion. The private sector continues to boost its investments, purchases and hiring even as government spending continues to drop."
The truth is that American corporate CEOs are sitting on $2 trillion in cash, which they are refusing to invest in production, let alone hiring, preferring instead the more (personally) lucrative stock buybacks and speculative financial investments.
The cutback in federal, state and local government spending played a major role in the reduction in GDP growth from 3.1 percent in the last quarter of 2010 to the miserable 1.8 percent figure for the past three months.
Geithner held out the prospect that the growth rate could return to the 3-4 percent level over the next two years, although that would barely make a dent in the massive army of unemployed and underemployed workers.
The author recommends:
Oil bosses rake in record profits as US economy stalls
[29 April 2011]
UAW sets benchmark for wage-cutting in global auto industry
[25 April 2011]