Yellen: Weather Hurts Economy, But How Much?
The economy appears to have hit a soft patch this winter, but it’s too soon to worry, according to Federal Reserve Chair Janet Yellen. As reported by CNN Money, she blames most of the recent weakness on the weather.
Over the last month, government data have pointed to weak job growth, as well as declines in retail sales, new home construction and manufacturing.
“Part of that softness may reflect adverse weather conditions. But at this point it’s difficult to discern exactly how much,” Yellen told the Senate Banking Committee in a hearing Thursday. Ironically, the hearing, originally scheduled for two weeks ago, had been postponed due to a snow storm in Washington.
But here’s the big question: If weather is not fully to blame, and the economy is indeed weakening, what will the Fed do? The central bank is currently in the process of winding down its bond-buying program — a process Wall Street has nicknamed “tapering.”
Cue a question from New York Senator Charles Schumer: “If it’s not mostly weather, would you consider pausing or changing the rate of tapering?” he asked Yellen.
She replied with what has become a standard line for Fed officials, often uttered by Yellen’s predecessor, Ben Bernanke.
“Asset purchases are not on a preset course,” she said. “So if there’s a significant change in the outlook, certainly we would be open to reconsidering, but I wouldn’t want to jump to conclusions here.”
So it seems the Fed could put the taper on hold, but only if the numbers start pointing to a lasting slowdown in economic activity.
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