Joint Economic Committee Chairman Pat Tiberi (R-OH) led a committee hearing entitled “The Economic Outlook with Federal Reserve Chair Janet Yellen” on November 29, 2017. In her last scheduled Congressional testimony before her term as chair expires in February, Chair Yellen described the economy as having gained strength in recent months but indicated that it could be doing better.

 

Chair Yellen explained:

 

Although the economy and the jobs market are generally quite strong, real GDP growth has been disappointingly slow during this expansion relative to earlier decades ... Congress might consider policies that encourage business investment and capital formation, improve the nation’s infrastructure, raise the quality of our educational system, and support innovation and the adoption of new technologies.

 

 

Chairman Tiberi agreed, describing conditions where banks are lending less, business are investing less, and workers remain on the sidelines. He explained what Congress could do to give the economy a needed boost:

Taxes and regulation are major reasons for the reluctance of businesses to invest and hire more workers in the United States, which is why the current effort in Congress to reform the tax system is so important. Both House and Senate versions of tax reform make critical improvements. 

In addition, Representative Erik Paulsen (R-MN) said that tax reform for corporations and small businesses would improve business conditions and lead to greater job opportunities, which would encourage prime-age workers to join the labor force.

Also addressing the current versus historical norms of the labor market, Representative David Schweikert (R-AZ) discussed unexpected trends in the labor force participation rate. He went on to add that a misallocation of resources, with an over-emphasis on four-year degrees, was impacting the labor market.

Turning to Federal Reserve operations and new policies enacted after Dodd-Frank, Vice Chairman Mike Lee (R-UT) questioned Chair Yellen about the how the Fed might react to accommodate a higher rate of economic growth.

Echoing unease about the impact of Dodd-Frank, Senator Ted Cruz (R-TX) spoke of his concerns regarding credit availability for small businesses considering the rapid rate of community banks that are going out of business. He reiterated the need for small business sector dynamism to grow the economy. 

Reiterating the need for greater access to credit, Representative Darin LaHood (R-IL) described the concerning state of the commercial mortgage market and the changing nature of the retail sector and asked about the impact of recent Fed policies on the commercial mortgage market.

 

Watch the entire hearing here.