Janet L. Yellen, the Fed’s chairwoman, said recently
that the combination of rapid job growth and slow economic growth was “a big problem.” The slow growth appears to reflect the slow pace of improvement in the productivity of the average American worker.
Consumer spending, the bulk of economic activity, slowed in recent months,
but the Fed’s statement said “the fundamentals underpinning the continued growth of consumption remain solid.”
So, too, for the broader economy.
The Fed is less concerned about the slow pace of economic growth in the first quarter, perhaps
because there is evidence the government has systematically underestimated first-quarter growth in recent years.
Growth over the last 12 months has remained around 2 percent, the mediocre but steady pace the economy has maintained in recent years.
This glass-half-full statement leaves the door wide open to a June hike, provided, of course, that the recent data letdowns are indeed transitory.”
Michael Gapen, chief United States economist at Barclays, said the Fed’s confidence in the face of disappointment was a recent shift.
Fed Holds Interest Rates Steady but Voices Confidence in Economy -
By BINYAMIN APPELBAUMMAY 3, 2017
WASHINGTON — A few pieces of disappointing economic news in recent weeks have not
shaken the Federal Reserve’s confidence that the economy is in good health.
