Federal Reserve Chair Janet Yellen acknowledged that the economy is weak, but said Fed policies have been a help, not a hindrance.
Since the central bank enacted historically accommodative policies following the 2008 financial crisis, the U.S. actually has grown faster than most other parts of the world and has a strong banking system, she said.
“The economy has recovered more quickly, for example, than … European Union economies have in the aftermath of the crisis,” Yellen said during her second day of congressional testimony Wednesday. “The Federal Reserve has put in place highly accommodative monetary policies meant to spur spending in the economy and restore low unemployment or to achieve the goal of maximizing employment and price stability as assigned to us by Congress.”
“I believe we’re coming very close to achieving those objectives, and monetary policy remains accommodative,” she added.
Yet overall growth remains weak, with the economy failing to break 3 percent for any single year during the recovery.
Though the U.S. has added about 16 million jobs since the 2010 peak in unemployment, wage gains have been meager and paychecks in inflation-adjusted terms actually are lower than they were pre-crisis.
“Economic growth has been quite disappointing,” she said.
Yellen faced more intense grilling from House members than she did before the Senate on Tuesday. Several members questioned her about the pace of economic growth compared to the extreme measures that the Fed has instituted, including seven years of near-zero rates and a balance sheet that has soared to $4.5 trillion.
Rep. Jeb Hensarling, the Texas Republican who chairs the House Financial Services Committee, pointedly told Yellen that Congress does not believe the Fed has “found the proper balance” between regulation and growth.
However, she defended the Fed’s actions.
“The economy is recovering from a very severe crisis,” she said. “We’ve put in place stronger financial regulation that has forced our banks to build up their capital buffers to deal with problem loans and to strengthen themselves to the point where they have been to support economic growth and recovery in our economy.”