By Peter Schroeder - 01/15/11 03:14 PM EST
Treasury Secretary Timothy Geithner said Friday that there is more confidence in the economy now, and the tax package passed at the end of last year has something to do with that.
Generally, predictions for the economy in 2011 are more optimistic than in 2010, and the large tax package that extended income tax cuts for all Americans helped contribute to that sunnier outlook, Geithner said.
"If you look at the average of what private forecasters are saying -- business economists, et cetera -- what they're saying now is that the economy is likely to grow between three and four percent this year, which is substantially stronger than what people thought this summer," he told reporters Friday. "that's partly as a result of the tax package and it's partly because the economy was gaining some momentum over the course of the fall."
On Thursday, Federal Reserve Chairman Ben Bernanke echoed those expectations, saying he anticipated the economy would grow by three to four percent in 2011. However, he also noted that that rate of growth is insufficient to significantly bring down unemployment.
The comfort of knowing that tax breaks will remain in place is helping consumers and businesses feel confident in investing a bit more, and helping the economy get back on its feet, according to Geithner.
"You're seeing a little more confidence, you're seeing a little bit more spark to recovery, and you're seeing people starting to invest and accelerate their hiring plans on that expectation there's going to be growing demand for their products," he told reporters Friday. "And I think that confidence is justified."