Recent high profile terrorist attacks abroad and mass shootings at home haven’t noticeably altered Americans’ normal economic behavior, Federal Reserve Chair Janet Yellen said on Thursday.
“I would not say that I see a significant effect at this point,” she remarked, when asked by Sen. Dan Coats (R-Ind.) about an economic chilling effect of gruesome massacres.
The central bank head added, however, that developments in the world have more boradly informed tentative consumer habits since 2008, “in the aftermath of the financial crisis.”
“[W]hile I think that there are many factors that contribute to that cautious behavior—the crisis itself, the slow growth, we’ve seen many businesses talk about regulatory uncertainty—I would add gepolitical risk as a further factor there that is causing that kind of cautiousness,” she noted.
Less than 24 hours before the hearing, on Wednesday, at least one man and one woman opened fire on a San Bernardino County, Calif. Department of Public Health holiday party. Fourteen people were killed and 17 were wounded. Two attackers were killed by police: Syed Rizwan Farook, 28, a former employee of the department, and and his wife, Tashfeen Malik, 27. As of publication, federal officials have taken over the investigation, which is still trying to establish a motive and whether any co-conspirators remain at large.
The attack Wednesday was America’s most deadly mass shooting since the infamous 2012 Sandy Hook elementary school killings in Newtown, Conn.
On Thursday, NBC News noted that there have been more “mass shootings” than days this year, with 355 of them having occurred thus far in 2015.
Yellen did, however, note in her opening statement, that there has been, in recent months, a growing risk that central bank chairs are more accustomed to discussing: trade imbalances.
“Growth this year has been held down by weak net exports, which have subtracted more than half of a percentage point, on average, from the annual rate of real GDP growth over the past three quarters,” she remarked.
Yellen also repeated comments made Wednesday indicating that the Fed will likely act later this month to raise key interest rates—even if the central bank doesn’t necessarily believe the economy has already reached employment and inflation levels that self-evidently should trigger a hike.
“[W]e must also take into account the well-documented lags in the effects of monetary policy,” she remarked. “Were the [Fed] to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals.”
“Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession,” Yellen added. She did not note what effect an interest rate hike-caused recession would have on mass shootings.
