America and the Great Recession

Likely new Fed chair, Janet Yellen

Although we've done better than Europe during our excruciating recovery, we've suffered a lot of self-inflicted wounds, some perpetrated at the state level but largely at the hands of our dysfunctional Congress. Janet Yellen managed to highlight that during her Senate confirmation hearings -- apparently without raising Republican ire. I guess she's already adept at FedSpeak, which is not necessarily a bad thing, in this case. From the Huffington Post:

"Fiscal policy has been working at cross purposes to monetary policy," Yellen said. "Some of the near-term reductions in spending that we have seen have certainly detracted from the momentum of the economy and from demand, making it harder for the Fed to get the economy moving, making our task more difficult.

"We are worried about a fragile recovery, and a more supportive fiscal policy, or one that at least had less drag, that did no harm, would make life easier," she added later.

Yellen was referring to the austerity that has come out of a rolling series of debt crises instigated by Republicans in the past few years, including the deep budget cuts known as sequestration and this year's payroll-tax increase. Under pressure from Republicans, the federal government has cut spending at the fastest pace since the end of the Vietnam War. Government investment has tumbled to its lowest level as a percentage of GDP since 1948.

This belt-tightening has probably cost the economy nearly 2.5 million jobs, according to a recent study by the Center For American Progress, a liberal think tank -- one huge reason this has been the slowest job-market recovery since World War II. Economists on the right and left agree austerity has hurt economic growth, employment and consumer spending, with executives from Walmart and Cisco among the most recent capitalists to complain about it.

The sluggish recovery is also making income inequality worse, Yellen pointed out, depriving poor and middle-class Americans of more and better job opportunities.
"This is an extremely difficult and to my mind very worrisome problem," Yellen said of inequality.

See the video. I tried to embed it with no luck. It shows what a soft tone Yellen can take while delivering a rather scathing critique.

I hope Congress was listening. Fat chance.