Federal Reserve Chair Janet Yellen told a joint congressional committee May 7 that the nation’s housing market has gone from boosting economic recovery to stalling it, HousingWire reported.
Yellen said that the lack of growth in the first quarter was largely due to the housing market, which was impacted by bad weather.
“With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already under way, putting the overall economy on track for solid growth in the current quarter,” Yellen said, HousingWire reported.
However, Yellen cautioned that a housing slowdown and a weak labor market make for a tenuous recovery, and she is concerned that housing activity could continue to be flat given weak job growth and wage stagnation.
Referring to April’s labor report, which showed that unemployment is down, Yellen remarked, “While conditions in the labor market have improved appreciably, they are still far from satisfactory,” HousingWire reported. She noted that the number of people who have been unemployed for more than six months or who are working part-time but would prefer full-time employment are at historic highs.
Yellen noted that interest rates will remain unchanged for the immediate future, but indicated that the Fed would continue tapering its monthly bond purchases in order to fully end quantitative easy by the close of 2014.