Federal Reserve press conference, 2014-03-19 — Chair Janet Yellen

Question (Ylan Mui, Washington Post): Hi, Ylan from the Washington Post. You mentioned in your testimony on Capitol Hill recently that the Fed was trying to assess the balance of weather effects versus more fundamental weakness in the economy as the reason for the slowdown in growth in the first quarter, and you guys mentioned in the statement weather specifically. Does that mean that the Fed’s analysis has come down on the side of weather, or are you still concerned that there could be something else going on that could be contributing to slower growth? And you guys also lowered your forecast for GDP growth this year.
Answer: So, I’d say, certainly the analysis that we’ve done—and we did spend a lot of time discussing weather and how it’s affected businesses and households in various parts of the country—certainly weather has played an important role in weakening economic activity in Q1. It’s not the only factor that is at work, and most projections for growth in the first quarter are reasonably weak. It’s an important factor. It’s not the only factor. But I would say it’s likely in the view of most of the Committee to begin to wash out in the second quarter, and we can even see some rebound. Now, I would say, I know what we’ve said about weather is a little bit complicated and confusing. So, you know, let me just say between December and January, the Committee saw data that led it to be quite a bit more optimistic about the economic outlook. So I would say incoming data since January, when our statement sounded quite an optimistic tone, partly down due to weather and partly down because we probably overdid the optimism in January. So, in some sense, our views have moved around here a little bit, but if we take December to March, the Committee’s views are largely unchanged.