Let Janet Yellen Tell You How It Really Is

Janet Yellen is the first woman to hold the position as Chair of the Federal Reserve and is making waves; not only having increased the key interest rate for the first time since 2006, but in her logical, simplistic & informative explanations of the US economy as well. In May of 2015 the Chairwoman addressed the Providence Chamber of Commerce with a predicted outlook for the US economy. She started off talking about how since the recession in 2008, the economy has made significant gains and is regaining its strength, however there was still work to be done regarding the areas of the economy heavily affected. The labor market and consumer price inflation were bogged down by the slow economic recovery and since the housing bubble crisis, many homeowners were left with high debt and less wealth. All this considered, Yellen goes on to explain how the US economy is in a position for moderate growth for “the remainder of the year and beyond.” Even within the year of 2015, the drop in oil prices allowed annual household savings in gas to be roughly $700.00 and in turn increased disposable income by approximately 4 percent. So it’s not that the economy is stagnant, it is just that the recovery from the economic crisis is taking its sweet time – which isn’t necessarily a bad thing.

We know from the Great Depression what can happen when the economy grows too quickly for its own good; the common saying of “what goes up, must come down” sums it up quite nicely. However, one of the current presidential candidates, Donald Trump, is banking on just that. Trump’s economic plan consists of creating a “dynamic booming economy that will create 25 million jobs over the next decade,” via large tax cuts. Such a massive increase in employment in such a short time frame causes skepticism for many economists, especially since the economy is not failing to the degree that a radical policy implementation like this would fix. Yes fixing the unemployment problem is key, but so is investing in infrastructure, research and design of new technologies and clean energy – All of which are highlighted in Hillary Clinton’s economic plan in addition to an unemployment plan. Going back to something that Yellen mentioned in her address, she said that the priority is on helping “bring our economy back to its productive potential” and supporting the “growth of productivity and living standards over the longer run.” So as the elections draw nearer, listen for how the “buzz-words” like sustainable productivity and productive potential are defined by each candidate to then determine which is actually paying attention to the current economic state.

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