By Peter Schroeder - 03/31/14 11:55 AM EDT
The Federal Reserve is well aware of the weakness in the job market and plans to continue lending a hand, Chairwoman Janet Yellen said Monday in a speech that rallied financial markets.
“There is … no doubt that the economy and the job market are not back to normal health,” Yellen said at a conference in Chicago. “The recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics.”
Yellen's remarks seemed to be a recalibration after a press conference earlier this month where she said the Fed could begin raising interest rates — which have lingered near zero since 2008 — early next year. Those remarks sent markets plummeting.
But stocks surged on Monday as Yellen said it is clear that the Fed is still “considerably short” of meeting its dual mandate, which includes both controlling prices and maximizing employment.
While the unemployment rate has fallen to 6.7 percent, Yellen noted that that rate is still higher than the peak of the 2001 recession, and does not even capture the full extent of trouble among workers. She noted there are 7 million people working part-time that want full-time work. Furthermore, fewer people are willing to voluntarily quit their jobs, suggesting ongoing concern about their ability to find a new one.
“There are real people behind the statistics, struggling to get by and eager for the opportunity to build better lives,” she said.
The Dow Jones Industrial Average spiked to highs following Yellen's speech. The blue-chip stock index at one point was up nearly 150 points before settling to around 92 points higher by midday.
Yellen is settling into the top spot at the Fed since taking over at the beginning of the year. Under her watch, the Fed has continued its course of slowing paring down the size of its monthly bond purchases, as the central bank slowly exits from years’ worth of stimulus via “quantitative easing.”
While the financial world pores over every utterance out of the Fed, Yellen struck a populist tone to the central bank’s efforts, saying policy shifts are aimed at people far away from trading desks.
“Although we work through financial markets, our goal is to help Main Street, not Wall Street,” she said. “When the Federal Reserve’s policies are effective, they improve the welfare of everyone who benefits from a stronger economy.”
She also highlighted the struggles of several specific people searching for work as a way to highlight the ongoing struggles in the labor market.
— This story was last updated at 2:27 p.m.