Peter Morici

Federal Reserve Chairwoman Yellen will testify to Congress Tuesday and Wednesday about the economy and future fed policy. We won’t learn much about either, because the Fed refuses to recognize the facts on the ground.

Its policymaking committee recently stated inflation is below 2 percent. Yet, according to the Bureau of Labor Statistics, consumer price inflation has been accelerating since March and is now 4 percent.

It asserts the economy and labor market are improving, but that denies the trials of most ordinary Americans whose wages continue to lag inflation or many who remain unemployed.

The Obama recovery has delivered 2.1 percent annual GDP growth. That’s about the same as the Bush expansion but half the pace accomplished during the Reagan-Clinton era. And the Bush-Obama economy has created 6 million jobs, whereas it would need 40 million to match the Reagan-Clinton record.

The unemployment rate has fallen steadily in recent months, mostly because so many jobless have quit looking for work and are no longer counted.

For native-born Americans, the problem is absolutely dire, because nearly all the new jobs have gone to immigrants.

America’s large universities, banks and technology companies have successfully pressured the Obama Administration to permit virtually uncontrolled immigration to push down wages for higher-paying science, technology and finance occupations, and in lower paying industries, such as hospitality, where most of the employment growth has occurred.

President Obama obliges, because Asian and Hispanic voters, who favor lax immigration enforcement, make the critical difference for Democrats in swing states like Virginia.

The Fed has recklessly pumped more than $3 trillion into financial markets, making credit cheap and bloating bonuses for hedge fund managers and Wall Street bankers who contribute mightily to political campaigns. However, trickle down benefits to ordinary folk—especially native-born Americans—have been minimal.

What stifled growth and jobs creation during the Bush years remains unaddressed by Obama and the Fed can’t fix.

The huge trade deficit was responsible for half the 2.9 percent first quarter drop in GDP, and more burdensome business regulations, which add more paperwork than accomplish results, are driving investment to China.

Both Obama and Speaker Boehner are fearful to confront Chinese protectionism, and administration restrictions on offshore petroleum development keep America dependent on Middle East oil and finance terrorism.


Peter Morici

Professor Peter Morici is a recognized expert on economic policy and international economics. He has lectured and offered executive programs at more than 100 institutions including Columbia University, the Harvard Business School and Oxford University.