Fed Chair Yellen gives rosy picture of U.S. economy

Fed Chair Janet Yellen gave a far rosier expected picture of the U.S. economy, than may had expected, as she cited “continued job growth” as a factor for a more stable economy, and expected increases in its benchmark interest rate, in her required reports to Congress.

One factor in the upbeat report was that 180,000 jobs were added to the nation’s economy during the first half of this year, giving credence to her cautious, some say, dovish, path to Capitol Hill, in what is not always an enviable duty. Case in point, was her, by now, infamous tongue lashing by the House Financial Services Committee chair, Jeb Hensarling, the Texas Republican who, previously, and practically demanded a formula for the establishment of future rate increases and when she would begin to decrease the bond portfolio, that it had held during the Great Recession.

Much like a benevolent mother, she decided that she would give him what he wanted and in her advanced published reports, she gave several formulas that might be used to establish future increases. While this seemed to placate him, she also refused, gently, to commit the Federal Open Markets Committee to one that would be definitively used, a frequent Republican demand, noting that there would be “no clear way to decide which one would be better than others,” noted The New York Times.

Adding to the peaceful air was the June Jobs report which gave an unemployment rate of 4.4 percent, the lowest pre-recession figure, but one that is tempered, once again by weak wage growth, this time, only by 2.25 percent, ending in March of this year. This has been a trend for several months, and one that may not see a significant change.

More worrisome is that the African American unemployment rate is 7.1 percent, lower since April 2000, but still higher than the national rate, a mixed report but one that does offer some level of comfort.

Labor participation is still an issue with only 62.8 participation in the labor force, compared to 66 percent a decade ago.

Part of the Fed mandate is to monitor inflation, and as it has struggled beneath 2 percent, it does give cause, to some, that if not watched closely, any future increases could be skewed, incorrectly, and some observers are in agreement.

With the economy in its ninth year of expansion, most observers are feeling optimistic, if not cautious, about the future. And, in her later remarks to the Senate she said much the same, and that "the risk of inflation" was two-sides, and that the Feds would be monitoring the "inflation trends" that would "fall below" their 2 percent target, "even though price gains have slowed in recent months."

Some observers feel that it will not take them that much longer to get to a neutral policy stance, for neutral rate quotes. But, most agree that the next rate increase, even if it is lower, won't take place until December. And, most are certain, including the chair that a 3 percent overall, is unlikely despite President Trump's assertions.