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A reality check today from Federal Reserve Chair Janet Yellen. She acknowledged that the U.S. economy is facing a higher level of risk than just a few months ago. NPR's John Ydstie reports.
JOHN YDSTIE, BYLINE: Yellen was on Capitol Hill giving her semi-annual report to Congress on the health of the U.S. economy, and here's what she had to say in her opening statement.
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JANET YELLEN: Financial conditions in the United States have recently become less supportive of growth.
YDSTIE: Yellen blamed the sharp decline in stock prices, less available credit, weak global growth and a further strengthening of the dollar, which hurts U.S. exports.
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YELLEN: These developments, if they prove persistent, could weigh on the outlook for economic activity in the labor market.
YDSTIE: Not a very sunny outlook. But, ironically, that's what investors were looking for - an expression from Yellen that she sees the same headwinds for the economy that they do. As investors see it, Yellen's acknowledgment of these economic headwinds makes it less likely that the Fed will raise interest rates again anytime soon. But Yellen walked a fine line in the hearing. She didn't explicitly take another interest rate hike off the table. And in response to a question about whether recent market turmoil had convinced policy-makers to put off thoughts of further interest rate hikes, Yellen said...
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YELLEN: I think the answer is maybe, but the jury is out. We've continued to see progress in the labor market. Over the last three months, there've been 230,000 jobs per month averaging through.
YDSTIE: And, Yellen said, while economic growth was disappointing at the end of last year, she expects it to pick up, helped by lower oil prices.
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YELLEN: If you look at the difference in oil prices now relative to 2014, for the average American household, we're looking at a savings of a thousand dollars a year.
YDSTIE: Yellen said that's boosting consumer spending. Wall Street responded positively to Yellen's testimony, but lost its gains later in the day. Also today, Yellen faced consistent questioning from African-American lawmakers about the continued high rates of unemployment in their communities, even as the national unemployment rate is at 4.9 percent. Here's Minnesota Democrat Keith Ellison.
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KEITH ELLISON: White unemployment in Minnesota is 2.9 percent as of December 2015, but black unemployment is 14.1. What can we do about it?
YDSTIE: Yellen responded that the Fed's main tool, manipulating interest rates to boost employment across the economy, could not be targeted at one group.
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YELLEN: The Fed, of course, has a role to play, but job training, educational programs, programs that address other barriers in the labor market, this is Congress's job to address.
YDSTIE: Yellen will visit the Senate tomorrow. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
