Why Isn't the U.S. Recovery Stronger?

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March 19 (Bloomberg) -- Bank of America's Ethan Harris and Bloomberg's Mike McKee discuss today's comments from Federal Reserve Chair Janet Yellen. They speak on Bloomberg Television's "Street Smart." Bloomberg's Peter Cook also comments. (Source: Bloomberg)

Weather is one of the things that the fed has been watching.

Unemployment is not the only thing they have been watching.

They have been watching a few other indicators as well.

They are watching industrial production.

There watching the isn report.

They are watching retail sales.

There watching consumer confidence.

-- they are watching consumer confidence.

We talked to many fed officials since the first of the year who say we do not know at this point.

We know there are other things going on, so we have to look past all of this.

It has been five long years, right?

Your average american, and you can sit there and tell me, it could have been worse, what the point is, it could and should be better.

I will not hide behind janet yellen on this, but i do think she is right about the idea that you had a major bank and real estate crisis, damaged balance sheets.

The main effect of low interest rates has been balance sheet repair.

Everyone has refinanced, banks are in better shape.

That repair process has distracted attention from growth.

The hope is the repair process is well advanced and we can start seeing some better growth.

I wonder if we ever see incomes creep back up.

Mike, you and i talk about income levels over the past 10 years, 20 years, 30 years.

It just does not go up.

It depends what income desk while you are in.

The theory is, of course, if the labor market tightens, there is less slack and employers will have to pay up and we will start to see wages rise.

We have seen a little bit of a rise.

Does it continue?

The fed can help reverse -- they cannot reverse the last 40 years.

In the last five years, wage growth has been awful.

No real wage gains.

We really -- they want to see three or four percent wage growth so that joe sixpack start sharing in the recovery.

Is in this because we are going through a structural shift?

Technology is replacing a lot of jobs.

It could be 10, 15 years before the economy catches up.

Or innovation catches up.

Technology changes happening quickly and that has created some structural unemployment.

We have also had a crummy business cycle recovery.

They are both working together.

The hope is the cyclical parts will improve.

Peter cook is still with us in washington.

Ceos were frustrated with washington and they felt like they were not going to put money to work, a were not going to risk that unless they had a better framework.

The fed has done its part.

Is d.c. catching up?

To some extent, the excuse that washington is less of an excuse today.

You have gridlock in washington, what they did but that budget deal together.

They are not doing more harm to the economy at this point, but they are not doing anything new.

They are not making legislative changes.

The issue of washington is less of an issue.

Other thing still out there affecting it.

I am struck i have unemployment, the gauge unemployment, was the death knell at the press conference.

Does wall street no longer have to look at that number anymore?

We still will.

We thrive on those things.

Peter cook, thank you so much for joining us from washington.

Mike, always a pleasure to have

This text has been automatically generated. It may not be 100% accurate.


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