Yellen Says Economy Falling Short of Congress-Mandated GoalsJoshua Zumbrun and Steve Matthews
Federal Reserve Chair Janet Yellen said the Fed has more to do to reach its goals for inflation and unemployment, and to repair damage from the financial crisis.
“Too many Americans still can’t find a job or are forced to work part time,” Yellen said at her ceremonial swearing-in event today in Washington. While the central bank’s mandates of full employment and stable prices are clear, “it is equally clear that the economy continues to operate considerably short of these objectives,” she said.
The Fed, in its Beige Book review of regional conditions, said today the economy in most districts grew last month even as harsh winter weather impeded hiring, disrupted supply chains, and kept customers away from stores and auto dealerships. Yellen and her policy-making colleagues are trying to determine whether recent economic weakness stems from weather or fundamental obstacles to growth.
The Federal Open Market Committee will meet on March 18-19, its first meeting led by Yellen since she succeeded Ben S. Bernanke last month. A “significant” change in outlook for the economy might prompt the Fed to consider a change in its strategy of slowing monthly bond buying, Yellen said Feb. 27.
“I promise to do all that I can, working with my fellow policy makers, to achieve the very important goals Congress has assigned to the Federal Reserve,” she said.
She also pledged to complete implementation of the Dodd-Frank Act, which was passed in 2010 to strengthen oversight of the financial system.
“I promise to stay focused on moving that process forward as quickly and responsibly as possible and to verify that these reforms are meeting the goal of safeguarding the financial system,” she said.
Yellen formally became chair of the Fed on Feb. 3 and has testified to Congress that she expects a “great deal of continuity” between her approach and Bernanke’s.
She elaborated on that today, saying she planned to continue with Bernanke’s efforts to improve communication and transparency at the central bank.
“Such communication is vital in a democracy and especially important for the Federal Reserve, which relies on the confidence of the public to be effective in carrying out its mission,” Yellen said. “Chairman Bernanke initiated press conferences in 2011 as one of a number of steps to make the Federal Reserve more transparent and accountable, and I promise to build on his legacy.”
U.S. stocks fluctuated today, with the Standard & Poor’s 500 Index down 0.1 percent at 1,872.13 at 3:20 p.m. after reaching a record high yesterday. The yield on the 10-year Treasury note fell one basis point, or 0.01 percentage point, to 2.69 percent.
She ended her brief three-page remarks with a pledge to remember that the Fed’s actions play out across the lives of ordinary Americans.
“I promise to never forget the individual lives, experiences and challenges that lie behind the statistics we use to gauge the health of the economy,” Yellen said. “The unemployment rate represents millions of individuals who are eager to work but struggling to provide for themselves and their families.”
Earlier today, a private report based on payrolls showed companies added fewer workers than projected in February. The 139,000 increase in employment followed a revised 127,000 gain in January that was weaker than initially reported, according to the ADP Research Institute in Roseland, New Jersey.
The Labor Department’s report on employment for February is scheduled for release March 7.
“When we make progress toward our goals, each job that is created lifts this burden for someone who is better equipped to be a good parent, to build a stronger community, and to contribute to a more prosperous nation,” she said.