Yellen to give outlook as Fed honeymoon fades
WASHINGTON – Janet Yellen has won credit for guiding the Federal Reserve’s first six months of transition from the Ben Bernanke era. Bernanke’s Fed had steered the economy through a deep crisis by slashing interest rates and restoring confidence in banks. Yellen has so far carried on his approach with barely a hiccup.
She may one day recall her first six months as a too-brief honeymoon.
The perilous question that now awaits Yellen’s Fed has put investors on nervous alert: Can it manage to raise rates from record lows without weakening the U.S. economy or spooking markets?
No one knows. Which helps explain the anticipation surrounding Yellen’s speech Friday at the economic conference sponsored every August in Jackson Hole, Wyoming, by the Federal Reserve Bank of Kansas City. Given that this year’s topic is labor markets, Yellen is sure to spell out her latest assessment of the U.S. job market.
Whatever she says – or, perhaps, doesn’t say – will shape perceptions of when and how aggressively the Fed will raise rates. Yellen has frequently characterized the job market as weaker than the unemployment rate suggests. She’s noted, for example, that the jobless rate, now a nearly normal 6.2 percent, belies other unhealthy trends: Weak pay growth, a sizable number of part-timers who want full-time work and high proportions of people who’ve been looking for a job for more than six months or have stopped looking.