WASHINGTON (4/1/14)--Citing "considerable slack" in the economy and job market, Federal Reserve Chair Janet Yellen defended the central bank's easy-money policies on Monday, in her first public speech since becoming Fed chair two months ago.
"I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policymakers at the Fed," Yellen said in remarks at the 2014 National Interagency Community Reinvestment Conference in Chicago (Reuters March 31).
The "scars from the Great Recession remain, and reaching our goals will take time," she said. "The recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics." At 6.7%, the national unemployment rate is still higher than it was at any time during the 2001 recession, she noted.
Though some economists believe the labor market remains tight, Yellen believes otherwise. Worker compensation shows no evidence of rising and the unexpectedly large proportion of part-time workers and long-term unemployed could draw people back into the labor market, or better-paying jobs, she said.
She cited three workers who either lost their jobs or absorbed sharp pay cuts when the recession hit, including one who "scrambled for odd jobs and temporary work."