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Lew says US still source of confidence amid global headwinds
[ATHENS] US Treasury Secretary Jacob Lew portrayed the world's largest economy as an anchor of stability amid weakening global growth and turbulent financial markets, saying investors shouldn't be surprised by China's slowdown and cheaper oil means consumers everywhere have more money to spend.
"The United States continues to grow, and it's still a source of confidence in the world," he told the World Economic Forum in Davos, Switzerland, citing record auto sales and an improving housing market. "There are a lot of headwinds, and there are factors out there in the world to be focusing on, but I think it's important to start with where are we." The slump in oil prices isn't all bad, Lew said.
Cheaper gasoline is helping US consumers improve their finances, and less-expensive fuel is also assisting Europe's strengthening recovery, he said Thursday at the annual confab of policy makers, investors and business leaders in the Swiss Alps. "I don't think we should assume that that money is evaporating - it's either spent or it's saved." Another trouble spot is China, where a weakening expansion and a plunging equity market are raising concern for the global economy more broadly. Lew said the real question is whether the Chinese government stays on the reform path toward a more market-determined exchange rate and the shift to a more consumer-driven economy.
"I don't see the situation today so dramatically different than at the end of last year," he said in response to an interviewer's questions. "It shouldn't be a surprise that China's growth rate is slowing down - that's something that's been under way and the question is really can they reach a sustainable, healthy growth rate," Lew said.
He downplayed recent swings in financial markets.
"I know it's been bumpy days in the markets," the Treasury chief said. "I try to look beyond the hour to hour, day to day, at what the big trends are. Obviously, markets are significant, and I'm not minimizing that it's been very choppy in the market, but I think you do have to look at some of these underlying things in a longer-term way." In times like these, government officials need to make sure they prescribe the right economic policies, Lew said.
"It's important at a moment of unease to remember that we have a lot of control, each of us in our own systems," he said. "We shouldn't just throw up our hands and say there are bad things happening."