JOHNSON STATEMENT ON MONETARY POLICY HEARING

WASHINGTON – Today, Senate Banking Committee Chairman Tim Johnson (D-SD) held a hearing on the Federal Reserve’s Semiannual Monetary Policy Report to the Congress.

“Good morning.  I call this hearing to order. Today we welcome Chairman Bernanke back to the Committee to deliver the Federal Reserve’s semiannual Monetary Policy Report.

 

“Nearly five years after the worst financial crisis since the Great Depression, the U.S. economy continues to show signs of improvement. Recently, we have seen the housing market strengthen and payroll employment firm up. Private sector job growth strengthened this year to around 200,000 jobs per month. The economy has shown signs of resilience despite fiscal tightening.

 

“On housing, I am pleased to see that the recovery is gaining momentum, with solid home price gains nationwide. New home construction has seen double digit growth and single family home sales have also picked up. Many homeowners remain underwater, but overall numbers continue to decline.   Going forward, I would encourage the Fed to be thoughtful in its actions to make sure these positive trends in housing continue.  Congress has a role to play too.  To address FHA’s short-term challenges, Ranking Member Crapo and I released details this week of bipartisan legislation to get FHA back on stable footing and strengthen a program important to many Americans.  Following this effort, we will turn to comprehensive housing finance reform legislation.

 

“Much progress has been made, but the labor market has not fully recovered from the Great Recession.  Labor force participation remains low even when accounting for retiring baby boomers, and long-term unemployment remains near historic levels.  Moreover, youth unemployment remains high and even many young college graduates struggle to find gainful employment. These trends have lasting effects on the economy. Over the longer term, skill erosion from prolonged unemployment would reduce our economy’s potential. It is important that we help, not hurt, young Americans’ prospects, and why it is so important that Congress finds a reasonable solution to the recent increase in student loan rates. 

 

“To fulfill its dual mandate, the Fed should not prematurely step on the brakes.  With consumer price inflation low, and the unemployment rate unacceptably high, the Fed must continue to take action to support employment.  When the time comes, it is important that monetary policy adjustments are gradual and do not disrupt financial stability and economic growth.

 

“Chairman Bernanke, I thank you for your years of service and leadership at the Federal Reserve during a challenging period in our nation’s history, and I look forward to hearing your testimony.”