* Sees tragically moderate reduction in unemployment
* The U.S. to benefit from emerging markets growth
* Confident Europe can solve fiscal problems
* Japan's main problem growth and ageing population
(Adds quotes, details)
DAVOS, Switzerland, Jan 28 U.S. Treasury
Secretary Timothy Geithner said on Friday confidence was growing
that the U.S. economy was heading for a sustainable expansion
but the cut in unemployment would still be tragically moderate.
U.S. gross domestic product numbers for the fourth quarter
are due out at 1330 GMT, with economists forecasting an
annualised expansion of 3.5 percent.
"There is more confidence now that the most acute part of
the crisis is over, absolutely in the U.S. but even true
globally," Geithner told a panel at the World Economic Forum in
"I think there is much more confidence now that we've got a
sustainable expansion. It is not a boom. It's not going to offer
the prospect of a rapid decline in the unemployment rate."
The U.S., along with Japan, on Friday faced new pressure to
confront its swollen budget deficit as ratings agency Moody's
said the risk that it would lose its AAA credit rating, although
small, was rising.
Geithner said there was a growing recognition that the
United States' fiscal position is unsustainable and increasing
political will to put it back on track.
"Political will is not fully manifest at the moment but it's
coming, there's no alternative to it. We can't grow our way out
of it," he said.
But he added the country should avoid cutting spending too
deeply in order not to hurt the recovery.
"I know there are people who would like to make very deep
cuts that would undermine the recovery," he said.
The GDP numbers are expected to provide the clearest signal
yet that a sustainable recovery is under way but progress
reducing unemployment has been painfully slow, and the figures
will likely be little comfort for millions of unemployed
"The overall output of the U.S. economy is now above
pre-crisis level, yet unemployment is still in the range of 10
percent," Geithner said, adding it was the way the US economy
works as companies cut deeply into the payroll and employment
base with brutal force.
"That is gonna consign us to a tragically more moderate
reduction in unemployment as the economy recovers," he said.
Geithner said he would not put inflation at the very top of
a list of global concerns but said it was a serious challenge
for developing markets.
He said the United States was in good position to benefit
from a rapid expansion of emerging economies.
"I think we are at a beginning, I still think at a very
early stage of what's gonna be a long period of exceptional
growth in emerging markets around the world," he said
He said it would be easier for emerging economies,
especially China, to manage those challenges if they softened
their link to the dollar.
(Reporting by Paul Taylor, writing by Dmitry Zhdannikov;
editing by Patrick Graham)