Transcripts For CSPAN2 Outgoing Federal Reserve Chair Yellen Before Joint Economic Committee 20171129

[inaudible] a process for our economy. The Federal Reserve is one of the most important institutions in the country and, indeed, the world. Chair yellen served as president of San Francisco fed, then as vice chair, then as chair of the Federal Reserve board. Our distinguished service at the fed encompassed the most tumultuous time in the United States financial and economic systems since the great depression. Many books of artie been written about the events of this time and many more will certainly be written from different points of view. And with varying assessments. One thing is certain. The Financial System and the economy have stabilized. We are no longer debating how to reconstitute them, but rather how they might work even better. This hearing will review the development the crisis and special sense doctor yellin became the chair of the fed in terms of the dual mandate of maximum employment and price stability. By the Standard Measure of unemployment which is 4. 1 last week, and by the Standard Measure of inflation which most recently stood at 1. 6 , both the first and second goals have been achieved. Although the standard metrics of unemployment and inflation are very good, all is not well in our Economy Economic growth has been slow to the point that some economists have advised that we should try to lower our expectations for future growth by about onethird from the average postwar growth rate. Wage growth has been surprisingly low, as has been in Business Investment. Labor force has remained low and very measured economic dynamism such as new business formation are way down from previous before the previous recession. Various expeditions have been offered including an aging population and decreased International Competitiveness of u. S. Businesses that are impaired by taxes and regulation. That money and banking also seem to have both a commercial banks rather than issuing more loans are holding extraordinary large amounts of reserves of the fed and the fed has invested trillions of dollars in mortgagebacked securities, and treasurys. So we have a condition of which businesses are investing less, workers are staying on the sidelines, and banks are lending less than they could. In short, the economy is not realizing its full potential. The joint Economic Committee is devoted several hearings this year to determine what Economic Growth has been slow and is interested in chair yellen is used. Taxes and regulation of major reasons for the reluctance of the businesses to invest and hire more workers in the United States which is why the current effort in Congress Reform the tax system is so very important. Both the house and the Senate Versions of tax reform make critical improvements in particular reducing the Corporate Tax rate to bring it more in line with those of other countries that we compete with it we are very interested to know the fed, how the fed proceeds such tax realignment and whether its policymaking will assume it increases the economys productive potential. In closing, let me express my deepest appreciation for chair yellens service to the nation in one of the most consequential position for the economy and americans will figure chair yellen, thank you so much. I will now you to the Ranking Member, for his statement. Thank you, chairman, and chair yellen, i want to begin by thanking you for your extraordinary public service. Your leadership at the Federal Reserve has played a key role in helping the economy recover from the financial crisis. The nation owes you a debt of gratitude for your careful stewardship of Monetary Policy. Last year when you appear before this committee i asked you about how we can get the economy to work for more americans. Unfortunately the Economic Situation is probably, is probably even more polarized today. Economic growth, jobs, startups, all are increasingly concentrated by zip codes. And while weve made Real Progress since the recession, some parts of the country are still being left behind. Too many rural areas, too many tribal areas are struggling to get back to where they were a decade ago before the recession. I represent a state with an Unemployment Rate well above where it was when the recession began back in december 2007. That sure doesnt seem to me like were fully recovered from this recession. I know that the federal open Market Committee has not yet made a decision on an Interest Rate hike next month, but if analysts are correct the fed is expected to raise Interest Rates which would be the third rate hike this year. With many communities across new mexico and the country still struggling, im concerned that we may be putting the brakes on too soon. Wage growth remains weak while health care, college and childcare are less affordable for working families. And this reality should inform both monetary and fiscal policy. We need targeted fiscal actions to grow the economy and help these areas that have been left behind. But thats not what some of my colleagues are to living in the current tax proposals. The republican tax bill moving through the senate adds 13 million to the ranks of the uninsured to pay for tax breaks for the wealthy and special interest. To hand out tax breaks to the wealthiest among us, republicans are not only taking Health Insurance away from millions of americans, but theyre wasting an opportunity to invest in our people and our communities. Theres a lot that we could be doing instead. Congress should be focusing on important goals instead of just when going economy and driving up wages for working families. For the cost of the current tax proposals we could literally provide all children with Early Learning opportunities, plus offer students free tuition at Community Colleges and public universities, interbroadband access for every american, rebuild our infrastructure and take bold actions to fight the opioid epidemic. But were not going to be able to make those kinds of investments is republicans insist on adding another 1. 5 trillion to the debt for tax giveaways to the wealthy. Chair yellen, as you conclude your term its an appropriate time to highlight the vital role an independent place in the column. This congress as was the case in the last congress is considering several republican proposals to limit the feds ability to independently conduct Monetary Policy. These bills seek to change the way the fed carries out Monetary Policy, even going so far as requiring the central bank to swap its current mortgagebacked securities for treasury bills. There are proposals to limit the central bank flexibility and respond to financial emergencies. This idea is especially hard to understand from my point of view in light of the Critical Role that the fed played in responding to the financial crisis and preventing another great depression. Im concerned about these attempts to undermine the Federal Reserves independence, and i suspect you may be as well. Id like to close on a point about the challenges of crafting Monetary Policy in todays political environment. Fiscal and monetary policies work best when they are aligned, but its difficult to know with any certainty where republicans in congress are ultimately heading with fiscal policy. Or use the pledge to reduce deficits but their tax package explodes to the deficit. The disconnect between words and actions is also visible on infrastructure. President trump has talked about the need to invest in infrastructure, but as we wait for Real Infrastructure proposal from the administration, republicans are proposing to eliminate key infrastructure Funding Sources like private activity bonds. They said they would deliver middleclass tax cuts, but in 2027, nearly 24,000,000 24 milln americans earning less than 100,000 100,000 a year would face a tax increase under the current House Republican tax plan. And in the senate bill, half of all households with you tax increase when it is fully implemented. The chasm between words and policy must make the are really challenging job of conducting Monetary Policy that much more difficult. Chair yellen, again thank you for your service to our country and i look forward to hearing your testimony today. Thank you. Thank you, senator. Rather than to the republican response i will just introduce the chair. It is with great pleasure for me to introduce doctor janet yellen, chair of the board of governors for the Federal Reserve system. She has longish sprints at the Federal Reserve including four years as vice chair of the board of governors and features as a president , chief executive officer of the Federal Reserve bank of San Francisco. Chair yellen previously served as chair of the council of economic advisers under president clinton and is chair of the Economic Policy committee of the organization for Economic Cooperation and development. She is also Professor Emeritus at the university of california at berkeley. Chair yellen under phd in economics from Yale University and has been granted an honorary doctor of law degree from brown university, and underwrite a doctorate humanity letters from the college. Welcome. You are recognized. Thank you. On chairman tiberi, Ranking Member heinrich, and members of the committee, i appreciate the opportunity to testify for you today. I will discuss the current Economic Outlook and Monetary Policy. The u. S. Economy has strengthened further this year. Smoothing through the volatility caused by the recent hurricanes, job gains averaged about 170,000 per month from january through october. The somewhat slower pace than last year, but still above the range that we estimate will be consistent with absorbing new interest to the labor force in coming years. With the job gains this year, 17 million more americans are employed now than eight years ago. Meanwhile, the Unemployment Rate which stood at 4. 1 in october, has fallen. 06 Percentage Points since the turn of the year and is nearly six Percentage Points below its peak in 2010. In addition, the Labor Force Participation rate has changed little on that in recent years, which is another indication of improving conditions of the labor market, given the downward pressure on the Participation Rate associated with an aging population. However, despite these labor market gains, wage growth has remained relatively modest. Unemployment rates for African Americans and hispanics which tend to be more sensitive to Overall Economic conditions than those for whites have moved it n on that over the past year, and are now near levels last seen before the recession. That said, it remains the case that Unemployment Rates of these minority groups are noticeably higher than for the nation overall. Meanwhile, Economic Growth appears to step up from its subdued pace early in the year. After having risen at an annual rate of just 1. 25 in the First Quarter, u. S. Inflation adjusted Gross Domestic Product is currently estimated to have increased at a a 3 pace in boh the second and Third Quarters, despite the disruptions to Economic Activity in the Third Quarter caused by recent hurricanes. Moreover, the economic expansion is increasingly broadbased across sectors as well is across much of the global economy. I expect that with the gradual adjustments in the stance of Monetary Policy, the economy will continue to expand in the job market will strengthen somewhat further. Supporting faster growth in wages and incomes. Although asset valuations are high by historical standards, overall vulnerabilities in the Financial Sector appear moderate as the Banking System is wellcapitalized and broad measures of leverage and credit growth remain contained. Even with the step up and growth of Economic Activity and a stronger labor market, inflation has continued to run below that you present rate since the federal open Market Committee judges most consistent with our congressional mandate to foster both maximum employment and price stability. Increases in gasoline prices in aftermath of hurricanes temporarily pushed up measures of overall Consumer Price inflation, but inflation for items other than food and energy has remained surprisingly subdued. The total price index for personal consumption expenditures increased 1. 6 over the 12 months ending in september. While the core price index which excludes energy and food prices rose just 1. 3 over the same time. About half a Percentage Points lower than a year earlier. In my view the recent lower readings on inflation likely reflect transitory factors. As these transitory factors that, i anticipate that inflation will stabilize around 2 over the mediumterm. However, it is also possible that this years lowinflation could reflect something more persistent. Indeed, inflation has been below the committees 2 objective for most of the past five years. Against this backdrop the fomc has indicated that it intends to carefully monitor actual and expected progress toward our inflation goal. Although the economy and the jobs market are generally quite strong, real gdp growth has been disappointingly slow during this expansion relative to earlier decades. One key reason for the slow down has been the retirement of the older members of the baby boom generation, and hence the Slower Growth of the labor force. Another key reason has been the end usually sluggish pace of productivity growth in recent years. To generate the assisting those in Economic Growth without causing inflation that is too high, will need to address the underlying causes. In this regard the Congress Might consider policies that encourage Business Investment and capital formation, improve the nations infrastructure, raise the quality of our educational system, and support innovation and the adoption of new technologies. I will now turn to the implications of recent economic developments in the outlook for Monetary Policy. With ongoing strengthening and labor Market Conditions and an outlook for inflation, to return to 2 over the next couple of years, the fomc has continued to gradually reduce policy accommodation. The committee raised the target range for the federal funds rate by a quarter percentage point at both its march and june meetings with a range now standing at one1. 25 . In october the committee began its Balance Sheet notarization program which will gradually and predictably reduce our securities holdings. The committee set limits on the face of Balance Sheet reduction. Those limits should guard against outsize move in Interest Rates another potential market strains. Indeed, there has been little if any market effect associated with Balance Sheet runoff to date. We do not foresee a need to alter the Balance Sheet program, but as we said in june, we would be prepared to resume reinvestment if a material deterioration in Economic Outlook work toward the sizable reduction in the federal funds rate. Changes to the target range for the federal funds rate will continue to be the committees primary means of adjusting the stance of Monetary Policy. Our beating earlier this month we decide to maintain the existing target range for the federal funds rate. We continue to expect the gradual increases in the federal funds rate will be appropriate to sustain healthy labor markets and stabilize inflation around the fomc hes 2 objective. That expectation is based on the view that the current level of the federal funds rate remains somewhat below its neutral level. That is, the rate that is neither expansionary nor contractionary, and keeps the economy operating on an even keel. A neutral rate only appears to be quite low by historical standards, implying that the federal funds rate would not have to rise much further to get to a neutral policy stance. If the neutral level rises somewhat over time, as most fomc participants expect, additional gradual rate hikes would likely be appropriate over the next few years to sustain the economic expansion. Of course, policy is not on a preset course to the appropriate path of the federal funds rate will dependent Economic Outlook as informed by incoming data. The committee has noted it will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal. More generally, in determining the timing and size of future Interest Rate adjustments, the committee will take into account a wide range of information, including measures of labor Market Conditions, indicators of inflation pressures, and inflation expectations, and readings on financial and international developments. Thank you. I would be pleased to answer your questions. Thank you so much, chair yellen. The Congressional Budget Office has noted that the United States treasury is on track to lose Corporate Tax revenue over the next decade because of our high Corporate Tax rate and worldwide system, are Encouraging Companies to shift income, and even their own headquarters overseas. Could a lower Corporate Tax rate and a more Competitive International treatment of our u. S. Companies reverse this trend by making america a more attractive place to invest in . So, i i think this is an important question for congress to consider, and to review all of the analysis thats been done on this topic. I would say there is widespread concern that the current structure of the Corporate Tax system does have the effects that you indicated, but look at the likely impact of particular proposals that may be under consideration is something that we havent done carefully at the Federal Reserve, and i would leave it to members of congress and the administration to judge what the likely consequences would be. Okay, thank you. One other question. Major criticism in some quarters of doddfrank has been the Regulatory Burden that it is placed on small banks in particular. Theres a legislative initiative that would raise the 500 billion, the two 250. The regular threshold for heightened oversight by the Federal Reserve. Do you agree that Overly Burdensome Regulations have standard particularly small bank lending to the effect of contributing to maybe a slow this of economic recovery that we both talked about from the last recession . Well, i do agree that Community Banks face substantial burdens, Regulatory Burdens. And its very appropriate for the fed and other banking regulators to look for ways to reduce the compliance burdens that they face. We are very, i know we meet wh Many Community bankers and are very aware of concerns about this. We are really focused on trying to tailor our supervision so that we find ways to reduce Regulatory Burdens. We have put into effect a number of changes that reduce reporting requirements, and recently have simple fighting capital proposals that we think should be addressed some of the concerns. But we have long been on record as favoring some increase in the ten, 50 billion asset threshold that are incorporated into doddfrank, in particular we think that the volcker rule and incentive compensation are things that should not apply to a smaller, less complex banks. And we do think an increase in those thresholds would assist as inappropriately tailoring our regulations. We do think its important that the fed retain authority to impose enhanced prudential standards on banking firms, particularly in the 100 100 250 billion total asset range, both for safety and soundness and Financial Stability concerns. And in particular, stress testing, we think, is a particularly important component of our safety and soundness approach, and to think its appropriate for that to apply to banks, lets say, over the 100 billion threshold. Thank you. I will turn it over to Ranking Member heinrich for five minutes. Thank you, chairman. Chair yellen, the Unemployment Rate in october was 4. 1 , the lowest since late 2000. But that rate, the average rate does not capture the health of the labor market and many areas in this country. You talk a little bit about that in terms of demographics as well. That is a broad expectation that the fed could raise Interest Rates at its december meeting and im certainly not asking you to keep your hand with regard to that, but what could change between now and upcoming fed meeting that could affect your thinking on that either one way or the other . And then if you would, talk a little bit about how you take into account those geographical and or demographic disparities when making those Monetary Policy decisions. So, i think its a very desirable development that the Unemployment Rate has fallen to a level thats about the lowest weve seen since the early 2000s. And to do think that this is development that has brought gains and improvements to almost all groups in the labor market. That said, there are huge disparities in have different groups are faring in the labor market, both in terms of Unemployment Rates where, for example, africanamericans traditionally, and still, have Unemployment Rates that almost twice those of whites. But also across groups with different degrees of education and in different parts of the country. And i do think a generally strong labor market is helpful in alleviating all of those disparities, but we dont have a target set of tools that would enable us to address disturbing differentials across groups. More generally, labor Market Experience of different groups depends not only on Employment Opportunities and Unemployment Rates, but also on wages. And we have a multidecade trend of increasing disparities in income and in wages with the premium, wage premium being earned by those with more education that has continued to increase over time. And we seen a long trend of disappearance of middle income jobs that could be either automated or outsourced. So there remains a great deal of pain in the labor market, in spite of the fact that i think weve seen general improvements split over to all groups. You asked me about our upcoming meeting at our Monetary Policy decisions. So we are very focused. We have a dual mandate here we care about price stability and we also care about employment and achieving our maximum employment mandate. At the present time, even though the Unemployment Rate is below levels that most of my colleagues see as sustainable in the longer run, inflation is running below our objective. And so our Monetary Policy has been designed to be accommodated and to allow the labor market to become tighter. We think that is actually helpful not only in its own right in bringing benefits to groups that are having a tough time in the labor market, and their idc encouraging signs, for example, that in a very tight labor market were so many firms are having a tough time hiring workers they are beginning to focus more on training. They are looking for ways to bring on board and help bring into the workforce individuals who in a looser labor market day they which is put into the reject pile. So i think all of that is good, and we are not seeing undue inflationary pressures in the labor market. So our policy remains accommodative. But we do think its important to gradually move our policy rate towards what i will call a neutral level, which would be consistent with sustainably strong labor Market Conditions. And we want to do this gradually because if we allow the economy to overheat, we could be phased with the situation we might have to rapidly raise rates and so the economy into a recession. And we dont want to cause a boombust set of conditions in the economy. I would love to see a sustainably strong labor market, and we think if inflation is depressed on a temporary basis, as i believe that we are carefully monitoring, we think that a gradual path towards a neutral stance is appropriate. While weve we been able toe down unemployment in recent years, one of the things we havent seen in that heightening of labor market has been upward pressure on wages. Do you have an opinion on why that might be different today than in previous recoveries . And what policies would be important in trying to address that . So it is true we have seen, i would just say, maybe modest upward pressure on wages. For example, the employment cost index which is a broad measure of compensation pressures has moved up a little bit, perhaps half a microsoft over the last three or four years. But wage increases are modest have a percent over one mauro aye is a labor market and the economy are not significantly overheated in spite of the fact we have very low Unemployment Rate. But importantly, over the long to mediumterm that pace of real or inflation adjusted wage growth hinges on productivity growth that firms really only able and willing to pay wage gains that are matched by productivity. For reasons that are not well understood, productivity growth has really been dismally slow in recent years. And to do think, i mean, i cant tell you exactly what the reasons are for that. It may partly reflect slow technological innovation, at least as it spills over into producing measured output thats part of gdp. We are also seeing signs of last dynamism. The process of Creative Destruction of new firms, innovative firms, expanding at the expense of those that are less innovative. That process seems to have slowed, and i think some productivity growth is associate with that. But if you ask for what remedies can there be to this, and i think to really see a faster average pace of real wage growth, you need faster productivity, i would point you toward investments, investment in people, investment in cisco capital in the private sector, Infrastructure Investments physical capital and policies that facilitate innovation. And, of course, the education and Human Capital of the workforce. Those of the classes of policies that could have a favorable effect on these adverse strains. Thank you. Vice chairman lee, youll recognize. Thank you very much, mr. Cha. And thank you, chair yellen, for being you. I want to thank you for your service over the years. Ive enjoyed the opportunity to visit with you as you have pity for the joint Economic Committee during your service as chair of the board of governors. Thank you. We make policy here in congress, here in washington there are a lot of people make policy. Policy is forwardlooking. It requires us to look to the future to anticipate events and to set rules that will govern behavior of members of our society. I assume you would agree with me if i said its important when youre making policy from time to time to look back and review what you have done, they get what you is succeeded or failed. Absolutely. So retrospective reviews of policy can be a good thing. Does the federal, does the feds look back and review its Monetary Policy choices from time to time . Our Monetary Policy choices next yes, of course we do. In doing that it looks back and tries to look at policy decisions it has made an figure out whether the data support those decisions. If the Federal Reserve already does that, how would a congressionally mandated transparent review of those policy choices be a bad thing . Why wouldnt that be a good thing to have congressionally mandated transparent review of the fence Monetary Policy choices . Well, we need to be accountable to congress and i completely agree that an independent central bank any Democratic Society needs to explain itself to the public and to congress, and appearances before congress where you ask questions about our policy choices and why, how they worked out is 100 appropriate. Nevertheless, i do think that it is very important that the Federal Reserve, like with most other central banks, be allowed to make independent policy decisions that are shielded from shortterm political pressure. So you didnt mention any specific legislation or ways of accountability, but ive long expressed concern about, for example, audit the fed legislation, or more recently the choice act. Because those acts would essentially bring shortterm political pressure onto the fed that could affect our Monetary Policy decisions by mandating realtime gao policy reviews of recent decisions that would secondguess the decisions made by the fed and call into question their legitimacy and credibility. I understand that that is your position, and at the same time while were talking about independent, the fact that these reviews are undertaken in the first place suggest to me that making them subject to a transparent review process would just about the public to have input. Its the desire, the impulsive any policymaker anywhere to insulate him or herself from any public review but we do live in a republic, and a republic where the people are the sovereigns, what ultimately the government is accountable to the people. And you at the fit exercise a significant amount of government Policymaking Authority and thats why think these things are appropriate. My time is short. I want to get a a couple of otr issues quickly. A joint Tax Committee analysis of the tax plan pending before congress is expected to assume an aggressive response by the Federal Reserve. One that would effectively assume that Monetary Policy would hinder some of the growth that could otherwise be anticipated from this taxable policy. Now, you emphasize in your testimony today that you expect a gradual adjustment to Monetary Policy. I would think a gradual adjustment from the fed would look very different at it certainly describes very differently than an aggressive Monetary Policy. Do you agree those are two Different Things . So, what i would say is that we are very focused on our congressionally mandated objectives of employment and price stability or to pursue inflation. And will try to adjust policy to achieve those goals in light of changes in the environment, whether they could be due to fiscal policy or importantly many other things that affect the outlook. I would say, look, we welcome strong growth. The fed is not trying to stifle growth. We are worried about trends that could push inflation about our 2 objective. As i said, its been extremely disappointing to the fed as it is bit unsure to all of you and to the public that weve achieved as much improvement as we have in the labor market, in the context of growth thats been running only slightly at a 2 . And if that pace of growth consistent with a labor market thats creating jobs for new entrance, if that rises, we will be delighted to support that and to accommodate it. So we dont have some cap on growth that were trying to achieve, but in the context of an economy that is close to full employment, it would be growth to have sustained higher growth would require that changes boost productivity growth or growth in the labor force. I understood, understood. Last year i asked you about how the feds approach to stress testing might damage the due process and property interest of investors. Not just investors but also investors in the form of school teachers, firefighters, those who invest in any way in any amount. Due process and Property Rights undermined anytime you have a rule of law that is everchanging. Anytime you have a rule of law that cant be understood as constant from wendy to the next, it is still unclear, so opaque or so subject to constant metamorphosis, one cant rely on what the law demands. What can you tell me about what the fed is done since we last spoke to make sure that the Due Process Rights of individuals, of investors are protected . So stress testing is a a vey important component of our supervision, and has led to more rigorous forwardlooking assessments of capital adequacy of large banks in particularly those that are systemic. So this really is a key component of supervision. But i would agree with you that the firms that are subjected to it need to understand it, and weve done many things, including putting out for comment proposals concerning the design of our scenarios. We put out a great deal of information about qualitatively what is in the models that we use. We have given feedback to firms on their models, and comments on their submissions so they understand the shortcomings we see in their approaches. And we are currently working on Transparency Initiative that would seek to provide more granular, more detailed information that would help banking organizations understand the ways in which specific characteristics of the loan portfolios would affect our evaluation of the stress losses. So i would agree, we would strongly resist publishing the actual models for a whole set of reasons, writing more information so the banks understand how we are engaging this evaluation is appropriate and important. My time is expected that you very much, jugular. Thank you, mr. Chairman. Thank you. Thanks, mr. Chairman. Chair yellen, thank you for your incomparable service to our country. Thank you. I think many of us will miss you very much. Thank you. You gave a very nice overview whats happening in the economy in general on average if you will, a macro statistics you opened up your presentation with, which describe a fairly stable, saw the positive picte in many ways. But i wonder when to think its time for us to start thinking about differently about the data that we look at . Because i saw some data recently where they disaggregated what happened to to kind of portfolios of the population, the top 40 and the bottom 60 , and they track this since 1980. When you look at that data you see a very different picture. People in the top 40 , or incomes on average are up about 40 since 1980, and the bottom 60 , they are flat. The top 40 on average used to be worth six times more than the bottom 60 . Now they are worth ten times more than the bottom 60 . The top 40 used to spend twice as much an education for their children than the bottom 60 . Now they spent four times as much on education for their children. The Retirement Savings of the top 40 on a relative basis keeper compared with 24 retirement has improved since 1980, and the story is very bad for the people in the bottom 60 . Life expectancy back in 1980 for both groups were actually extending. And now for the first time in quite some time were actually seeing Life Expectancy of people in the bottom 60 going down. Im just wondering, when do you think we as policymakers, you in your position at the Federal Reserve fss policymakers on the hill, have to start thinking differently about decisions we make based on the disparities that are starting to grow in our country . On the talking top 1 , et cetera. Im talking large disaggregation pulls, top 40 versus top 60 . It seems to me that bottom 60 is also particularly possible to macro trends going on from one rapid change in the future based on automation and innovation, theyre much more likely of the jobs disrupted. And further they rely much more unimportant Government Programs that are likely to come under continue to stress. So when you make decisions about what to do with Monetary Policy, how much have you started or has the fed started to disaggregate some of this date and make the decisions differently . Well, you describe in your question i sent a very disturbing, longterm trends that the fed is very focused on and, in fact, some of the information that enables one to document these trends is produced by the Federal Reserve, and are surveys of Consumer Finances and our surveys of household and economic decisionmaking. And, of course, there has been over decades a trend toward rising inequality of both income and wealth in the United States, that its not recent. It is something that has been going on for many decades. Bike. But as a cause you to change decision she wouldve otherwise made based on whats happening for the average performance of the economy . Do you see what i mean . Well, they do affect the face of overall spending in the economy here for example, if high income households spend less of extra income they earn, then low income households that shift in Income Distribution can make a difference to overall spending. And it is something we would take account of. Because i was thinking from hearing your average statistics, the position to actually continue towards a more normal rate make sense but when you look at this disaggregated, excuse me, i would be really scared of how vulnerable this bottom 60 is too any kind of shocked. I guess well be on to what we should be doing, in your judgment when we think about the school policy, tax policy decisions, spending policy decisions, how much should we will have a laserlike focus on programs, whether to be investing in infrastructure, investing in Human Capital, creating incentives and the taxco for people to allocate capital and parts of the country that have been left behind economically. How high a priority sure that before us in in making our decisions based on the statistic you look at . For us, unfortunately, we dont have tools that enable us to target particular groups. So our own focus is, we take these trends and study them. We really only have a blunt tool that can address this, but congress and the administration, you have a much wider set of tools. And obviously its up to you to formulate appropriate would you think its a difference be addressing these trends . Well, i am very disturbed and has spoken out for many years about the disturbing trend towards rising inequality. And the equity of the tax code is something that i think should import be taken into account. And as i said earlier, we are suffering from slow productivity growth, and here to think its quite important that in making fiscal policy and other decisions that the focus be on how can that be improved, and that does. 2 investment in people, infrastructure, also private capital, technology, education. So these are squarely i think in congresses court at a do think they are urgent to address. Thank you again, chair yelle yellen. Thank you, mr. Chairman. Look, this may be one of those auspicious day. I dont know if this is probably your last time do this. Its also our chairman enzi, probably his last one. Im going to miss mr. T very because hes one of the few people to tolerate me. So i appreciate your class thing in the search lovefest, its an opportunity to Say Something publicly that i said to the chairwoman privately. Your team around you, particularly or senior team, has always been very kind to my staff and myself, particularly when we had some more unusual data type questions. Im still a bit of an advocate of one day more the models becoming public but a lot of that is already beginning, i mean, like i live on some of the atlanta thats data compare gdp now and they allow you to look at parts of the formula. So i believe that openness that you began with has come a long ways, would be wonderful and day to be able to login and do certain stresses. For those of us in the policymaking, what would happen if labor force did this . What would happen if Interest Rates did this . Answered understand whats in the backend of some of the data. So congressman, you know, the model that we use at the fed for Economic Analysis of Overall Economic trends, we refer to it as Federal Reserve board u. S. This model is in the public domain. Sitting on our website, and people, anybody who wants to perform what if Monetary Policy were different, or if the labor force grew faster or slower, you know, we have tried to provide access to that tool to the public. Its gotten much better. I live on the atlanta feds. I know thats a snapshot of current time and snapchat is not a trend but its been very helpful in removing some of the mysteries. Now to run through a dozen questions quickly as i can. You actually touched on this. Had the expense of flying back to phoenix about a week ago and is look at something that was a few years old, and in the current unemployment, was looking at the table so Labor Force Participation. And being predicted a few years ago of what would happen, and what we see happening right now, and it was talking about the demographic trend, Labor Force Participation will continue to fall but yet we see some interesting things in the last threequarters. Not to be in the labor force are moving into the labor force that we just saw some recalculations, numbers of Social Security disability, and all of a sudden the longevity of the trust fund jumped substantially because it turns a number of folks who arent so skirted scooted disay move back into the labor force. So theres something in our models that how i know its at the margin but were already seeing some of the data that the substantial Economic Opportunity thats in the labor Job Opportunities, is actually starting to pull people without were falling out of Labor Force Participation. If you had interest in that, where would you go to find more information in such a thing . This sort of goes back to the question of the billy to back test and figure out where weve also made mistakes in some of our models. So i mean, that researchers have been very detailed modeling of Labor Force Participation trends, and thats published research in places like brookings papers and refereed journals, and my staff to provide you references on that. As i mentioned in my opening statement, what weve seen over the last three years is aggregate Labor Force Participation has been essentially flat. The trend is downward and a flat Labor Force Participation rate with the downward trend means just what you said speedy whats contra to people predicting just four years ago. I think a strong labor market does attract people back in, and people who mightve left and retired are being consented to remain in the labor force. Of course we know that more recent cohorts of retirees, although when people reached retirement age, their Labor Force Participation falls significantly. Younger retirees are working more than older retirees, thats a trend as well. How many of our seniors are staying in the labor force. More than they used to. I know theres come going over time, but he just left sides going to complement i fear often we fussed at the fit but you only have so many tools and a lot of the tools are actually sitting here with us and for some of us may actually agree and disagree ideologically, there was some interesting things in, call them the cost tabs, in the data, trade school type jobs, alignment to use previous conversations, and seeing southwind of its, but yet we often turned around and reinforce the University Education model. And it turns out it may be our own misallocation of design and resources that are actually causing many of these problems out there, that we have to rethink what we drink policy wise with that, you back, mr. Chairman. Representative maloney. Thank you, mr. Chairman. I just want to start off by thanking chair yellen for your extraordinary service, as the very first woman to lead the federal chair. You broke a major barrier and were also very proud of you. Thank you so much. And thank you, too, for your record as that chair that i i think a record speaks for itself. The Unemployment Rate has fallen to 4. 1 , the lowest in 17 years. Inflation has been steady for gdp growth is now a robust 3 . The fed also ended the quantitative easing program, has begun the process of shrinking the 4. 4 trillion Balance Sheet, and assorted to gradually raise Interest Rates as the economy improves. So in short, i would say your tenure has been an unqualified success by every metric. You have and what of the most successful fed chairs in history. Thank you. Such as want to publicly thank you for your service. Everything youve done and said ime of us in this nation will miss you. Thank you so much. I appreciate that. I would ask you about regulation. I think that the fed has generally done a good job under your leadership in writing regulations that of strengthen the safety and soundness of our financial institutions. But there have been discussions in congress about tailoring these regulations that were put in place after the financial crisis. And as you know the Senate Chairman crapo has introduced Bipartisan Legislation on regulatory relief, a major package for banks, some people want to go further than this. And to really rollback doddfrank. So i have two questions. First, do you think it is a good idea to rollback doddfrank in this post crisis regulatory time . And secondly, what do you think of chairman crapo regulatory relief package . Do you think it goes too far or do you think it strikes the right balance . Well, let me start with the first question about rolling back doddfrank i think that doddfrank provided an excellent roadmap to a series of changes that have led to a far safer and sounder Banking System, and one that has been able over the last ten years, there have been stresses of all sorts that it hit the u. S. Financial system, sometimes emanating from abroad, and its proven resilient and able to support good growth and a strong labor market. And core reforms include more and higherquality capital, more liquidity, stress testing, whh i think is very important, and resolution planning. So if the systemic firm were to fail, that we would have the tools to be able to deal with it without it imposing such cost on the economy. And i would not want to see those things rolled back. I think it would be very dangerous to do so. That said, i do believe its appropriate to take the regulations to the systemic footprint of a financial institution. And so tailoring is an important principle. And we have long indicated that we would be supportive of raising some of the thresholds the incorporated into doddfrank, in particular the 10 billion, 250 billion thresholds. And that would give us more ability to tailor to the systemic footprint of particular firms. Particularly important to us is having the continued ability to impose enhanced prudential standards on the firms that might fall under a new threshold, if we thought it was justified by safety and soundness or Financial Stability concerns. So the legislation thats been proposed, i havent had a chance to study every detail of it, but i would say it generally incorporates those principles and is a move in a direction that we think would be good in enabling us to appropriately tailor our supervision. Thank you. Also, the u. S. Banking system is the strongest in the world, but we now have International Standards that have raised the Capital Requirements for all banks. I know that you have an ongoing discussions about capital standards at the international level. Are you considering the link to International Standards at all in these discussions . Standardized Capital Requirements and foreign firms, particularly european firms, some of whom rely on european models testing and analysis suggests they may hold too little capital relative to what we think would be appropriate based on standardized models. We have ongoing discussions of this issue and i think are coming closer to reaching agreement on this vital issue which would enable us to finalize basel iii. This is not standardized in u. S. , more about standardizing what we would want to see applied to foreign banks. But weve imposed, we chose to impose standards on u. S. Banks, particularly systemically important banks that exceed the minimums that were agreed in the south wind that were intended to be individual companies that see a need and benefit from having Higher Standards are fully expected to adopt Higher Standards and in some cases, particularly with the largest and most systemically important u. S. Based banking organizations we have done that in imposing Higher Standards and think its appropriate and warranted by the safety and soundness benefits for our Financial System. Thank you at the general latest time is expired. Thank you, mr. Chairman. Let me also thank you for your service to the country and taking the time to engage with us as policymakers. You mentioned about the importance of having more robust growth as needed in the economy in terms of investment to Capital Investments in people, employees at Different Companies and some of the tax policies engaged in talking about right now. We can and should lead to that more robust growth that a lot of people anticipated. I want to dive more into the conversation earlier about wage growth has been relatively modest and youve got this phillips curve issue, which the fed looks absurdly in terms of the logic of it and a tight labor market. You should have low unemployment lead to more competition for workers and higher wages and some of those would get passed down to higher wages for consumers. Inflation would rise, but the data doesnt support that. It has been this mystery. Im curious from your perspective as you look at whether the socalled phillips curve that takes the inverse relationship between unemployment and inflation no longer be invalid. What are your thoughts around that . It is still a framework i have personally found useful. The relationship between unemployment and inflation has become more attenuated over time. In though, the impact of changing unemployment on inflation has diminished and i think that is well documented in many, many studies so i dont want to overstate how strong that linkage is. The overall framework incorporates an understanding that there are other very important fact or is that affect inflation. When you look at the u. S. Inflation history over the last five years thursday the financial crisis, movements in oil prices and also movement in the dollar that is translated into significant changes in the pace of imported goods, those things have had very substantial effect on the overall u. S. Inflation. So if we look back over the last three, four years, five years, i dont think it is a mystery what inflation has been so low. First we had a lot like in the labor market. Then we had periods when we had oil prices have really put inflation down, starting in mid2014 the dollar appreciated substantially that held import prices down. It really wasnt a mystery. We want inflation to be close to her 2 object it is possible but of course theres going to be variation in these produced variation. This year was a 4 in the vicinity of full employment, oil prices have been roughly stable in the dollar if anything this year has depreciated somewhat pushing not import prices. Why is inflation knowing this year in bens so low . Ive opine on the fact there may be a number transitory or idiosyncratic factors that explain not, but it is something we are keeping a nine jan and want to look carefully at. Generally a framework that incorporates the labor market along with these other factors, does provide a pretty good understanding of inflation in the u. S. Would you say the tax reform proposals could be large employers, but also small employers that are aimed at increasing product to the even at the low rate right now would be helpful or essential in terms of making sure those individuals at age 25 to 54 range that has in their prime working years where you have a higher Labor Force Participation rate, for instance, with the higher product to the Health Change and enter those people into the labor market again . Investment pending by private companies, does matter to how wellequipped members of the labor force are to produce and stronger investment could raise product entity and productivity goes up that concert to boost wages, but the linkages between tax policy and investment spending are ones that economists dont agree on and its important for congress to be trying to evaluate what you think the likely impact would be, but stronger investment i think would have those favorable impacts. Thank you. Representative speier, youre recognized for five minutes. Thank you, mr. Chairman. I want to add my thanks for your firm and, deeply grounded wisdom and nonpartisan leadership in you for filled the dual mission of the fed. Low unemployment, stable low inflation very, very well. We are really going to miss you. Thank you, congressman, appreciate that. Abandoning nafta and now the Trump Administration working on prioritizing modernizing nafta, yet we have seen the higher perception is driving down the value of the peso, making mexican goods and services more competitive. Do you agree stable trade treaties are still the best way to solve trade imbalances . So, without commenting on the details of nafta or any particular trade treaty, i generally think that at least overall the United States has benefited from more open Global Trading environment was gotten the benefit of a broader range of goods and Services Available to consumers at better prices, lower input costs for firms and the ability to export to a broader range of markets, but there are adverse impacts of such developments on particular groups in the labor force and it is important for congress to keep in mind that need to address just locations that may come from trade, but generally i think it has been beneficial in the studies that have been done suggest the u. S. A. Think enjoyed some benefits over all. Mexico i believe enjoyed significant benefits and as you have said, there has been downward pressure on the peso because of the discussions taking place. Thank you. The Washington Post has lot of discussion about how much Dynamic Growth from taxcut packages out there. The Washington Post has suggested that if the revenue increase were harder to dismiss the would be automatically raised. This is the best way of ensuring fiscal responsibility . I will say my understanding is the idea of triggers is motivated by a concern that somehow over the picture we have over the sustainability now into the future and i would simply say that i am very worried about the sustainability of u. S. Debt trajectory. Our current debt to gdp ratio is about 75 is not frightening, but its also not low. But when you look at, for example, cbo longterm budget projections, it is the type of thing that should keep people awake at night and it shows a picture in which as the population ages, expenditures on medicare, medicaid and Social Security grow more rapidly than tax revenues and the debt to gdp ratio grows and there should be concerned. Exactly what is the right way to address this . I think it is a matter for you to decide. My understanding is this discussion is motivated by that and i just think its right to be focused on that problem and i would urge you to remain focused on it. You are absolutely right. Thats what stimulates. Mr. Paulson talked about the phillips curve and the top about low oil prices, the movement in the dollar. The transit or idiosyncratic factors and low inflation. Others have suggested technological innovation, the global impulse of integrating china come all these other lowcost countries into Global Trading system means the fomc 2 target will be hurt to have for the foreseeable future. Well, we are forecasting inflation will move up over the next year or two to 2 and that is a reasonable forecast although i believe there is uncertainty about it, which is why we have indicated we are closely monitoring these trends. It is important that trends you describe they are important trend and i would point out rs simmons at the sustainable level of Unemployment Rates have declined very substantially in the factors youve discussed that have arguably exposed firms more heavily to global competition, constraining prices and restrained Bargaining Power of labor, rather than necessarily showing up as chronic low inflation, these things can instead mean the labor market can operate on a sustainable basis that lower Unemployment Rates than we might have thought of in the past in the 60s or 70s or 80s. Currently, my colleagues estimate the sustainable level of Unemployment Rate in the u. S. Is just over 4. 5 that contrasts with a six or higher were used to think in the trends you mentioned has been influential, in other words it is true that takes the labor market are lower unemployment to give us 2 inflation. I dont mean to minimize their importance, but it should be achievable for us and we do have a low Unemployment Rate. They make thank you. Match. Thank you, chairman t. Berrien thank you dement shared yellen for your service to our country. Thank you. And the question really to the commercial labor market. We are all aware in 2008, 2009 when we had financial crisis as it related to the Housing Mortgage market. As we look at the growth of amazon and other online retailers across the country, really changing the Business Model as it relates to retailers , we continue to see traditional brickandmortar stores and malls and others really obliterated across the country. Jcpenneys, macys, sears, large malls and mediumsize market there continues to be commercial properties in this type of brick and mortars become more and more unproductive. As we look at the commercial mortgage market, i wonder if you could comment on whether there is a possibility as these as properties continue this trend of causing a financial crisis like we saw in 2008 in these markets going back. So i think you are raising an import question. I dont have detailed information at my fingertips on these trends. I think delinquency rate generally remained pretty low in commercial real estate. They are our Legacy Properties inc. In cm bs that is much higher delinquency rate, but we are focused on underwriting standards at banks that maintaining strong underwriting standards to protect the Banking System against possible weaknesses results and especially commercial real estate. We are seeing overall in commercial real estate the valuations are very high and we have highlighted elevated asset prices, commercial real estate generally is an area also where we do see elevated prices are low cap rates, so we are focused on the soundness of underwriting standards in the safety and soundness of Banks Associated with it. In detail, just how this trend is going to play out, i would like to get back to you on that. You have any fears or concerns . These are obviously significant trend that are affecting retail. What they will mean for banks is something i would like to look at more closely and get back to you. Okay, thank you. Another topic i wanted to talk generally about the makeup of the Federal Reserve. For the last decade, the Federal Reserve has had at least one vacant seat on the board of directors and should mr. Powell become the next year after her resignation, the Federal Reserve board will only have three out of seven positions filled. I understand the president must nominate and the Senate Approved each of these appointees in both parties or culprits in the gridlock. Can you give us examples of how the Federal Reserve does not function up to the lake without a full board of governors . I do think it is important a number of governors serving on the board increase and ideally it would be at full strength at seven. Certainly my colleagues and i would welcome additional appointments to the board. In fact, i dont think there has been any significant amount of time, perhaps not ever the board has operated with only three members that is a very very difficult situation. Let me say, it does not stop the Federal Reserve and liberations benefit from having more individuals with a range of views and of course in the various operational and oversight responsibilities that we have disabled to carry out its key work even with the diminished board. Just lastly, do you have any reform as it relates to this topic . To reform as it relates in general . The recommendations are reform measures with this problem of only having three limited numbers on the board. Well, i think it is part of the trend of lower appointments and vacancies and i think it creates a problem for it to take so long to have individuals nominated and confirmed in this is coming you know, something important for the senate to look at in the administration there have been many reports, including one i participated in myself several years ago by the as about vacancies in the difficulty of making appointments to agencies. I do believe it is a significant concern, but i dont have suggestions for you on how to improve that. I agree with you on that. Thank you peered representative adams five minutes. My words of thanks along with my colleagues and i want to associate myself with congresswoman who made the comments about the accomplishments theyve made and women is smart of you to fill some of those seats. Thank you very much for your service. In my home state of north carolina, the First Quarter of 2017 is for. 2 for africanamericans the unemployment disparity is not a reason to onetime occurrence. The Economic Policy with that the change of Unemployment Rate between 2007 and 2017. Their Analysis Shows the Unemployment Rate in the carolina is what it was before the recession. While the Unemployment Rate for africanamericans and hispanics is actually higher than before the recession. Been there a significant disparity between the white Unemployment Rate in the black Unemployment Rate. So i find this verities for many years from africanamericans, white and hispanic and white Unemployment Rate be very disturbing and to reflect problems that minorities and less skilled individuals also worth having the labor market and they are very worrisome trends and i would say most of these groups Unemployment Rates and measures of functioning are back to levels that we had precrisis. I believe it is the case that since the bureau of labor statistics started collect information on africanamericans, Unemployment Rates that it almost never declined below 7 . The rates bounced around a lot. In september, the africanamerican Unemployment Rate did decline to 7 in the most recent reading in october it moved up about half a percent, but is generally at a low level. Unfortunately, africanamerican and other minority breeds are highly cyclic, so when the Great Recession hit and unemployment skyrocketed, the worst experience, the largest increase in unemployment came for africanamericans, hispanic and other minority workers. As the labor market strength and, the africanamerican Unemployment Rate declined more strongly in the disparity is now, which are longstanding africanamerican Unemployment Rates are basically doubled those of whites were back to Something Like that again. Thank you very much. The United States makes up about 5 of the population and 2014 africanamericans constitute to. 3 million or 34 of the 26. 8 million correctional populations. What do you think is the impact of mass incarceration on unemployment Racial Disparities . I think it has a very important negative effect and there have been many discussions about ways to potentially address that, but clearly it is something that employers will be less willing to hire individuals who have criminal records and this is a serious problem and can earn. I will say that this is anecdotal as opposed to systematic, but as the labor market has tightened and so many firms, now almost all firms weve talked to report they are having difficulty finding workers, i do hear more report of individuals who may have a criminal record who are succeeding in finding jobs and being integrated back in the labor force, but it is clearly a very significant issue. Thank you very much. You actually answered the other question i was going to ask in response to the labor force, thank you very much. I yield back. Senator peters, five minutes. Once again thank you for your service. Appreciate your leadership on this committee and wish you well in your future endeavors. Shared traits to come ill add my accolades to everybody else on the committee. We appreciate your tenure as chair. You have presided over the fed during some challenging times and have always been a steady hand and we appreciate that steady hand and look forward to following you in your future endeavors as well, which im sure will be equally as significant. Thank you so much. Appreciate that. In response to some previous questions, you mentioned and i would like you to elaborate a little bit that the linkage between tax policy and investment is under some dispute among economists that there is disagreement as to whether or not these tax cuts would definitely lead to a level investment. Is that because the data is inconclusive . Tell me more about this debate and why we cant necessarily have a strong linkage. I am not an expert in this topic at the outside and it is not one that we are attempting or independently evaluate, but there is literature on this. Empirically, the linkage is hard not clear, so it is difficult race on empirical information to draw strong conclusions. Theoretically tax changes that lower the cost of capital looked to in principle greater investment and with greater investment there is arguably some pass through into wages. I would say empirically just generally impact of the cost of capital on investment spending are very hard to detect also an Economic Data while most economists think there is some linkage, it is not Strong Enough or pronounced enough to come across in a clear way in the Economic Data and of course the entire set of tax changes that are under consideration matter, so i think this is a complicated question. It is complicated enough because it depends on Investment Decisions made by people who receive these tax breaks and those are human beings. My folks and what they would do if they get a large tax break. In fact, was interesting that today bloomberg there was an article, tax cut by plans to reward investors. Ceos are telling us something very different than what we hear from the administration. In fact, they tell us for the most part if they get the tax break they will do a Share Buybacks. Probably significant Share Buybacks. The chief executive of amgen said Earnings Call that hes been actively retrained capital and will continue to do that in the form of dividends and buybacks paid executives from cocacola, pfizer, cisco cfo mr. Kramer said will be able to get much more aggressive on a Share Buyback after a tax cut in november 14 speech, the wall street journal ceo council by trumps top economic adviser, as to ask if they plan to reinvest. I think a couple hanssen appeared another corporation that would impose an even lower tax rate on companies stockpiled overseas earnings, giving them an incentive to return trillions of dollars in offshore cash to the u. S. That money is also unlikely to spur hiring because companies are already well capitalized and bring on as many employees as they need according to the Foreign Exchange strategist at bank of america, merrill lynch. In fact come hes quoted as saying companies are sitting on a large amount of cash. They are not financially constrained. Conducting a survey of more than 300 companies asking their plans for a tax overhaul and they were all basically focused on their shareholders and engaging and buybacks. As the fed looks at you saying theres not a linkage between tax cuts and investment, the fed is looking at that and policies, our wages . Share buybacks would increase wages from the usual linkage would be investment in capital and equipment if they occurred or to the extent they occur would help raise the productivity of the labor force and boosting their productivity would likely end up raising wages, but the linkage occurs through Capital Spending and not through Share Buybacks. Share buybacks dont do anything. Share buybacks would increase the stock price. Thats the main reason for that. If you have stock options, you will do really well. Youre significant shareholder, you will do really well, but the person on the floor at the shop making the products will not see much of anything. The mutual funds perhaps would be great, but its disproportionately at the very n Share Buybacks. In talking about the fact that theres less dynamism in the economy as well and theyre certainly a number of economists believe part of the dynamism is a result of an increasing concentration of capital and fewer and fewer firms. That is accurate because of the concentration, we are seeing fewer firms, less dynamism, less business formation also that can slow growth when you have that concentration, growth is constrained. If you accompany me want to increase share price, the best thing to do is increase the Share Buyback and that will be great in how will that impact your policy . The gentlemans time has expired but the share may finish answering any questions. So, we will, you know, understand uncertainty about what the impact of policy will be as unfolds we see what those consequences are. We will try to evaluate it as it occurs, but there is tremendous uncertainty as i said based on existing literature. Right, thank you so much. Senator cruz youre recognized for five minutes. Thank you, mr. Chairman. Chair yellen, thank you for your service today. You noted in your testimony inflation has continued to run below the 2 rate that the fomc considers the most consistent but maintaining maximum employment and price stability and youve expressed some uncertainty as to why this is the case. One factor your testimony didnt discusses our Labor Force Participation rate remains at its lowest rate since 1978 of 68point to that. Low Participation Rate impact the employment picture the government is facing right now . Of the employment picture . Yes. It is a complicated question because there are good reasons why Labor Force Participation in the aggregate is declining in the United States and its a trend we expect to continue because it mainly reflects the aging of the u. S. Population and the fact that individuals, once they reach their retirement years participate much less in the labor force than before those years, so even though more recent cohort of retirees are working more than their parents did overall in the Labor Force Participation rate dropped when the population ages. This is a continuing if you look at prime age workers, and they are not back to the levels prerecession. What you do have in United States for prime age workers, especially men the longlasting multidecade decline in Labor Force Participation and my own assessment would be so thats not about retirement. That is about working age individuals who are not participating in the labor force. I think that reflects trends the adverse that are affecting particularly low skilled americans in the workforce the disappearance of middle income jobs, pressures on wages at the lower end, the Opioid Crisis which reflects that labor market distress, but also contribute to individuals staying on at the labor market and not able or willing to work. So i think we do have adverse trends affect the Labor Force Participation. I mean, when you ask me how does this impact may view of employment, when i see for the last few years in the u. S. Labor force Participation Rate has been essentially stable. I see that as a good trend showing improvement in the labor market because stability is occurring in the face of declining underlying trend and so it does suggest with a stronger labor market weve got individuals who are being brought back in a greater Job Opportunities in science they are singing. I agree with you that the trends towards working age adult is troublesome and we need serious Economic Policy to address and hopefully change that project tree. And dave robust business is set there. Credit availability for Small Business. When Congress Passed doddfrank, one of the major bases stopping the phenomenon of two big to fail. As weve seen them implemented, and they are all bigger now. You may have referenced that in your last answer with you edition of capital they are gotten bigger and bigger under doddfrank and wasting Community Financial institutions going out of business at a record rate. How would you assess in particular impacting Small Businesses as you point they are gradually diminishing in numbers and need to recognize the burden then something they are suffering from and reduce. There were other things that are making it tough to be a Community Bank and thats impact of net interest margins and earnings, so that is a completely separate factor. In terms of Small Business lending come in the landscape has changed a lot, perhaps Community Banks are providing less than they used to, large banks are providing more online lenders in new firms for coming in and devising new ways to land quickly to Small Businesses in ways that are perhaps less costly than traditional banks. But our surveys have some particularly small minority firms did do feel they dont have adequate access to credit. Survey says small firms at the National Federation of independent business that is somewhat larger, but still small firms suggest most firms feel they have adequate access to credit. They dont feel they are in an environment where their credit needs armed being satisfied, so as a general matter, credit is available. I think banks are looking to extend credit when we ask of them questions. They tell us they dont see much demand on the part of Small Businesses for credit. It is sometimes hard to disentangle demand, what is driving something, whether its demand or supply, but there is evidence there is weak demand and its not simply a matter of weeks supply due to regulations. Thank you at the gentlemans time has expired. Last but not least, senator klobuchars recognized. Thank you, mr. Chairman. Thank you for your service and good luck in thank you, chair yellen. I sent out a tweet about how youve been a strong trusted and youve done the good work and its very popular. When summer tires its a good moment, but mostly want to thank you coming in as vice chair and chair at a difficult time in our country and certainly in my state is seeing your steady hand and what weve seen with the Unemployment Rate interstate at threepoint 3 and while ive seen issues with the cost of things, i see issues with our debt, other things we have to tackle. In the congress i do want to thank you for the steady hand. So one of the things ive talked about in the past i dont think has been taught about much here is the infrastructure reissue. Im so disappointed as we look at this tax bill we are seeing both inhouse and now in the senate and now its passed in the senate case over 125 trillion in debt, but if we are going to start messing around like that, i would think we would want to put in an injection of funding into our infrastructure. Could you talk about how our broadband could benefit our economy . I do think its one of the fact there is that impacts productivity and when i think about what we can do to improve Living Standards in product duty, i think about all sorts of investments. Private investment in Capital Equipment is important that affects many workers. You and i talked about that during the downturn. Right. Infrastructure is important and i would also add to that focus on investment in people on Human Capital, which is actually a mind of rising inequality is a form of investment to the deserved emphasis. And that has been a major focus of mine because ours dated such a low Unemployment Rate, especially in the rural areas. Susan collins and i introduced a bill to expand Apprenticeship Program and theres much more work we could do. Can you talk about that issue with costume and sometimes graduating from high school or are graduating from even college with degrees and they cant find jobs and we have hundreds of thousands of these jobs that are in welding and trade in these things. I mean, clearly we have a tight labor market almost every firm that you talk to discusses the challenges of finding qualified workers and there is a degree of mismatch that the qualifications that people have, sometimes college graduates, but often High School Graduate cant qualify for the jobs. So i think training, apprenticeships, other countries like germany seem to do a better job of matching people with jobs, and training than we do. I made a practice of my own when i travel around the country. I am interested in what sort of programs work. Theres a lot of efforts by Community Colleges and nonprofits, sometimes partnering up with firms to try to reduce the skills gap in what i would say is i see many programs they think are very promising. You know, six months or a year giving people the training and credentials they need for manufacturing jobs that requires Technical Skills doesnt require College Education and what i am particularly gratified by is this tight labor market like we have now, firms are really interested in these programs and they really want to participate because they really need workers. When they care about it and they dont have a lot of applications, they are willing to invest in it, too and partner with the Community College for the nonprofit and guarantee that they participate in these trading programs and guarantee when someone comes out successfully of the program, they will these be sure its going to get a chance at the firm and this is occurring. Obviously congress can consider investment, i think its just making it easier with everything from tax credit or if it is also those kinds of things. In minneapolis, which is 700 a day with these credentials in a directly graduate because the company like sewer construction, one of the biggest minority on Construction Companies that just worked in our stadium that will host a super bowl, not that im doing hockey net peer on stage, mr. Chairman, in february. These things have to be encouraged because otherwise we are going to lose work. I completely agree and i think these programs are deserving and the emphasis can be successful. We are trying in the reserve things with best days to disseminate approaches that work. Thank you very much. I look forward on your new capacity. Thank you. The comment of your tenure in service to our country and this being your last hearing, its been an honor and privilege to get to hear you and like you, this is my last hearing come enjoy the economic area and as the chairman and i want to thank Ranking Member heinrich in senator leahy and all the members of this committee for linking might term a successful one. I also want to thank the staff of Economic Committee in particular how they made the committee to name back in for the historical knowledge i want to thank hoenlein keeley for helping us get through all the challenges that the beginning of this process. Its been an honor and a privilege to chair this hearing. I look forward to watching it in the future as a private citizen. Thank you, chair, for distinguished service. If members wish to submit questions for the record comparing record will be open for five business days. With that, we are adjourned. Thank you so much. Thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] tran [inaudible conversations] [inaudible conversations] well, coming up in eight minutes we will go live at noon eastern to the u. S. Senate. Lawmakers may take up repeal of the force arbitration rules and they are expected to start work later today on the republican tax reform plan approved by the Senate Budget committee yesterday. You can read the bills in detail at cspan. Org and click on the congress tab and which are ripe for congressional chronicle where you can see a link to the measure. The senate coming in at noon eastern. Well have live coverage on cspan2. In the meantime, discussion with a reporter from capitol hill looking into antiharassment training for members of congress. Explain why they are taking this vote today in what would have been in congressional offices if it does pass. Well, this follows a move by the Senate Earlier this month to require training for all memberl and staff about how to prevent and avoid harassment of the work place. The reason they are taking that is ensure you are some listeners know that cant be a string off highprofile harassment and allegations against media figures today is not lower, charlie rose and of course senator al franken and congressman john conyers. This is what some lawmakers will be a first step or is trying to change the culture on the hill. Remind us what happened in thena senate when it comes to ts issue in my the house and senate armed two different tracks here. Right, the house and senate often times its hard to tell from the outside, but they make new rules are there two separate committees to determine thingse payment and employment policies. In the senate its called the rules committee in the house is called the administration committee. The senate acted fast because the entire rules committee got publish us pass a resolution saying we are going to institute mandatory training. The house is a bigger chambers said they decided to have a hearing a couple weeks ago and at the hearing there were some explosive details shared. Congresswoman Jackie Speier said shed have to sit and members of the house who had engaged in sexually harassing conduct. Quite the furor and that is i. T. That todays vote. Is there any chance this will fail today the two numbers today congressmant tom cole both said they expected to pass the bill and be voting for. Yeah, expected to pass early. The question is whether congress can and will go further and do more. What else are members like Jackie Speier and others who have to suffer looking for . They are looking for wholesale remodeling in the late Capitol Hills office of compliance, the official name of the workplace misconduct. The way they handle complaints. Right now, any member who undergoes harassment is required to sign on for counseling and mediation and required to sign confidentiality pact in a lot of cases shield them from talking about their experience if they would liketa to. Congresswoman speier and a bunch of colleagues want to change that. How close is the legislation from getting the voter any sort of movement . Well, we hear there will be another hearing in the House Administration committee in the coming weeks. This time on the secret Settlement Fund used to pay claims related to not just sexual harassment, by paid disputes, discrimination and this is all part of the case they came to passe. However, the news cycle moves fast, so its really tough to say whether this can be sustained. At this t bill does pass tod, when does this new training kick in for congressional offices and what would that training look like . What you know about it . Well, there is several different options. The popular option is an online video provided by the office of compliance, but the office also does inperson training and its also possible to get trained her well because the employment council, and those are the lawyers who work on behalf of members interests. As far as requirements, it would give time to comply. In some cases we might not see 100 training until early next year. The turnaround time is pretty fast. Political congressional reporter there, appreciate your time. Talk to you again down the road. Thank you. This weekend, cspan city tour takes you to kansas city, missouri with help of our Cable Partners will explore the history of kansas city. Saturday at noon eastern on book tv, well be at the Kansas City Public Library pendergast digital collection. Paul pendergast was the political machine of kansas city really in control from 1925 to 1939 and a political machine is being tied into organized crime and other illicit act cavities taking bribes and kick backs and using influence to make sure your preferred candidates are elected. Let me introduce you to rube foster who would establish in the 1920s at a meeting that took place at the old ymca. As a matter of fact, right around the corner from where the museum currently operates that is contingent of where the owners met in 1920 the national league, the black baseball they can of course they would go on to operate amazingly before the years. 1920 until 1960. A few cms is traveling across the country. We recently stopped in baton rouge, louisiana, asking folks what is the most important issue in the day . The number one issue facing my district continues to be flood recovery. In baton rouge, we had mr. Up five and 2016 and my district is heavily impacted. By citizens in my district right now are forced to deal with issues regarding fda allows for the federal government requires that to be a duplication of benefits and right now we have trouble getting them is the necessary dollars to recover because in a state run program they have to detest the amount that they were received through the sba loans. Right now i recovery has been solved because of the issues. We are working with their congressional delegations, they began its a tough issue in our community. The most important state issue is restoration. Our coastline is eroding and we are losing a football field with land for our and i would like for the state to focus on restoring and replenishing our coastline. So future generations can see it. I think the most pressing issue that we face and one that we are already working on and have been since the conclusion has been our situation here in louisiana. Not uncommon to a lot of states. I think ours is a little unique that what we face in 2018 is some temporary revenue and form of taxes that would inspire in june of 2018. So the ability to be able to find the solutions for that boat on the revenue side and the expense side that we would be working on with the solutions before we arrive in 2018. Voices from the state on cspan. The u. S. Senate about to gavel end. Senators will start the day with general speeches. Awaiting Senate Action as a republican tax bill approved by the Budget Committee yesterday. The chaplain let us pray. Almighty god, king of kings, and lord of lords, thank you for this opportunity to boldly approach your throne of grace,