Paulson Contradicted By His Former Company Goldman Sachs On Economic Recession

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"Paulson Contradicted By His Former Company Goldman Sachs On Economic Recession"

On Monday, President Bush said the United States currently has “a resilient economy,” an attempt to counter growing fears of a coming recession. Similarly, on Tuesday, White House spokesperson Tony Fratto ignorantly proclaimed, “I don’t know of anyone predicting a recession.”

Yesterday on CNBC, Treasury Secretary Hank Paulson also downplayed talk of a recession, giving assurances that economic growth will continue. At the same time, however, he refused to directly deny whether there is a recession:

PAULSON: [T]he economic data is mixed. We’re watching this very closely. I said I think that we’re facing some strong headwinds, but the economy’s going to continue to grow. [...]

Q: So people who think we’re in a recession have it wrong? They’re not seeing the real picture right now?

PAULSON: I simply said that, we grew at five percent in the third quarter, almost five percent in the third quarter. Again, spending was strong, right up through the fall. There’s some concerns, There’s some [inaudible]. There’s some mixed economic data, and we’re watching it very closely right now.

Watch it:

[flv http://video.thinkprogress.org/2008/01/paulsonrecess.320.240.flv]

But today, “Goldman Sachs became the latest Wall Street firm to predict that the U.S. economy will drop into recession this year.” As AmericaBlog observes, prior to taking his job in the Bush administration, Paulson was the CEO of Goldman Sachs. CNBC reports:

“Over the past few months, we have become increasingly concerned that the US housing and credit market downturn would trigger not just a growth slowdown and substantial Fed easing — our long-standing view — but also an outright recession,” Goldman Sachs said in a note to clients Wednesday. “The latest data suggest that recession has now arrived, or will very shortly.”

Merrill Lynch has also stated that “Friday’s employment report, which sent shares tumbling worldwide, confirmed that the US is in the first month of a recession.”

Transcript:

Q: Secretary, there are some people who believe we’ve already headed into a recession. In your seat, what do you think of that view.

PAULSON: Well I just told you that I think the economic data is mixed. We’re watching this very closely. I said I think that we’re facing some strong headwinds, but the economy’s going to continue to grow.

Q: Continues to grow — that’s not a recession.

PAULSON: And the other thing we said. And I think you’ve heard the president. He indicated that he’s thinking through options. And so you know, we’re considering various options to do everything we can to keep this economy growing.

Q: So people who think we’re in a recession have it wrong? They’re not seeing the real picture right now?

PAULSON: I simply said that, we grew at five percent in the third quarter, almost five percent in the third quarter. Again, spending was strong, right up through the fall. There’s some concerns, There’s some [inaudible]. There’s some mixed economic data, and we’re watching it very closely right now.

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