US Recovery to be Slower Than Typical: Geithner

The first stage of the U.S. economic recovery is coming along better-than-expected but the rebound may be prolonged as consumers save more and businesses clean up their balance sheets, U.S. Treasury Secretary Timothy Geithner said on Thursday.

"Realistically, it's going to be a slower-than-typical recovery," Geithner told an audience at The Buttonwood Gathering being held at Pace University in New York.

Economic recovery will ultimately come from the private sector, which has not yet demonstrated the ability to fully assume that role, he said. For this reason, the government must be careful in withdrawing emergency supports that have set the stage for recovery, he said.

The Federal Reserve is also prolonging its support, including extending its program aimed at keeping mortgage interest rates low.

"The classic pattern is that governments break too soon and too early," he said. "That is a costly mistake" that Obama administration wants to avoid, he said.

One way to give consumers and businesses the confidence needed to boost economic growth is to get health care reform completed, he said. He added that health care reform could reduce uncertainty for consumers whose spending accounts for two thirds of economic activity.

CNBC.com Timothy Geithner

Consumers, whose spending is crucial to the economy, are eager to know how health care will be handled, he said.

On executive compensation, Geithner said the government was seeking reforms that do not directly set pay but that would make people in financial services more accountable if they took excessive risks.

"Change the practice, change the incentives ... without creating expectations that it is the role of government to decide what people should get paid."

- Via CNBC