Federal Reserve press conference, 2013-12-18 — Chair Ben Bernanke

Question (Jon Hilsenrath, Wall Street Journal): Jon Hilsenrath from the Wall Street Journal. Mr. Chairman, as you well know, the Fed is going through a transition next month. Can you talk about the role that Janet Yellen played in formulating the policy that’s being laid out today, and what kind of consistency the public can expect as we go into her tenure, assuming she’s confirmed, with the program that you’re laying out today? Will it carry on under her leadership?
Answer: Yes, it will. I have always consulted closely with Janet, even well before she was named by the President, and I consulted closely with her on these decisions as well. And she fully supports what we did today.

Question (Wyatt Andrews, CBS News): Mr. Chairman, thank you. Wyatt Andrews at CBS. Given the billions of dollars that the Fed has put into the economy over the years, do you see a leading reason why the economy has not created more jobs?
Answer: So, we’ve been in a—it’s been about a little over four years now since the recovery began, four and a half years. It’s been a slow recovery. There are a number of reasons for that. It’s—of course, that’s something for econometricians and historians to grapple with, but there have been a number of factors which have contributed to slower growth. They include, for example, the observation that financial crises tend to disrupt the economy, may affect innovation, new products, new firms. We had a big housing bust, and so, the construction sector, of course, has been quite depressed for a while. We’ve had continuing financial disturbances in Europe and elsewhere. We’ve had very tight, on the whole—except for in 2009—we had very tight fiscal policy. People don’t appreciate how tight fiscal policy has been. At this stage in the last recession, which was a much milder recession, state, local, and federal governments had hired 400,000 additional workers from the trough of the recession. At the same point in this recovery, the change in state, local, and federal government workers is minus 600,000. So there’s about a million workers difference in how many people are—have been employed at all levels of government. So, fiscal policy has been tight, contractionary, so there have been a lot of headwinds. All that being said, we have been disappointed in the pace of growth, and we don’t fully understand why. Some of it may just be a slower pace of underlying potential, at least temporarily. Productivity has been disappointing. It may be that there’s been some bad luck—for example, the effects of the European crisis and the like. But compared to other advanced industrial countries—Europe, the U.K., Japan—compared to other countries and advanced industrial countries recovering from financial crises, the U.S. recovery has actually been better than most. It’s not been good, it’s not been satisfactory. Obviously, we still have a labor market where it’s not easy for people to find work. A lot of young people can’t get the experience and entrée into the labor market. But, I think, given all of the things that we faced, it’s perhaps, at least in retrospect, not shocking that the recovery has been somewhat tepid.