The job market and the economy are growing stronger and at a healthy pace, Federal Reserve Chair Janet Yellen told PBS NewsHour’s Judy Woodruff Friday as she wrapped up her four-year term on a momentous economic day.
The day started with a solid jobs report showing 200,000 new jobs last month and better wage growth. But the Dow Jones continued plunging during a brutal week, finishing the day down more than 665 points or about 2.5 percent. It capped the worst week for the Dow in two years.
But Yellen was focused on the long-term picture, saying that for “almost all groups in the American economy … you’re seeing plentiful jobs and wages beginning to rise at a slightly faster pace.”
In the NewsHour interview, recorded before the stock market closed, Yellen also warned that stock market valuations are elevated beyond their usual historic levels, including the ratio of price to earnings. Yellen stopped short of characterizing the market’s rise in recent months as a bubble.
Even as the market was dropping, Yellen stressed that the financial system is more resilient now than it was during the financial crisis of 2008. Still, she said, “investors should be careful and, I would say, diversified in their investments.”
Yellen also struck a sober tone on other trends in the economy. She said productivity — a key barometer watched by the Fed — has been weaker than hoped. She also said the pace of new firms being created over the past decade was slower than usual.
Other highlights of her interview:
- Yellen stressed the importance of maintaining financial regulations, arguing that demands for higher capital from large banks was a crucial buffer for the economy. She also criticized Republican efforts to roll back regulations in the Dodd-Frank law. “I think all of us need to remember the financial crisis, the terrible toll it took on Americans — the lost jobs, lost homes, lost retirement savings,” Yellen said.
- Yellen said it’s “distressing to see how few women have reached the highest levels in the kind of work I do — economics, business, finance.” She is the first female chair of the Federal Reserve. “Too few women I think are going into these fields at younger ages,” she said of gender equality and the dearth of women at the top levels of the finance industry.
- Yellen said she had wanted to serve another term as Fed chair and was disappointed by President Donald Trump’s decision not to renominate her. Yellen was the first chair in the modern era to not get re-nominated after serving a full term.