This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

US Economy Still Subpar, Yellen Says In Testimony

By MARTIN CRUTSINGER

WASHINGTON (AP) a¿¿ Janet Yellen says the economy has regained ground lost to the deepest recession since the 1930s. But she says unemployment remains too high at 7.3 percent and notes that the Fed is still trying to accelerate the economy's recovery.

In testimony prepared for her confirmation hearing Thursday, Yellen said the economy is still performing far below its potential. And she pointed out that inflation is running below the Fed's 2 percent target.

"For these reasons, the Federal Reserve is using its monetary policy tools to promote a more robust recovery," Yellen said in her testimony. "I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy."

Yellen offered no hints that she would deviate from the low-interest rate campaign of the outgoing chairman, Ben Bernanke. Her comments amount to a defense of the extraordinary measures the Fed has used under Bernanke to try to keep long-term borrowing rates near historic lows to encourage spending and promote growth. These measures have included three rounds of bond purchases.

Critics have warned that the Fed's support programs run the risk of igniting inflation or inflating price bubbles in assets like stocks or homes. Yellen said a strong recovery would ultimately allow the Fed to begin to normalize its policies. This would include reducing its reliance on its $85 billion-a-month in bond purchases, which have been intended to keep long-term rates down.

Some economists saw Yellen's comments as a sign that the Fed won't move at its next meeting in December to reduce its bond purchases a¿¿ a process often called "tapering." Rather, the Fed could delay any tapering beyond March, when many have predicted it would begin.

"This is a strong signal that the Fed is not going to reduce its support for the economy any time soon," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 17,440.59 -127.94 -0.73%
S&P 500 2,067.64 -12.01 -0.58%
NASDAQ 5,039.7760 -48.8540 -0.96%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs