Excerpt
SUMMARY: Stocks plunged on Friday over fears that the Federal Reserve will accelerate interest rate hikes. The sell-off was driven by news that the economy added a net of 200,000 jobs in January, with wages rising at the fastest pace in more than eight years. Judy Woodruff gets analysis from Liz Ann Sonders, chief investment strategist of Charles Schwab.
"Yellen sees long-term growth as she leaves the Federal Reserve, despite bad day for the Dow" PBS NewsHour 2/2/2018
Excerpt
SUMMARY: The job market and the economy are growing stronger and at a healthy pace, Federal Reserve Chair Janet Yellen told PBS NewsHour’s Judy Woodruff [on] Friday as she wrapped up her four-year term on a momentous economic day.
The day started with a solid jobs report showing 200,000 new jobs last month and better wage growth. But the Dow Jones continued plunging during a brutal week, finishing the day down more than 665 points or about 2.5 percent. It capped the worst week for the Dow in two years.
But Yellen was focused on the long-term picture, saying that for “almost all groups in the American economy … you’re seeing plentiful jobs and wages beginning to rise at a slightly faster pace.”
In the NewsHour interview, recorded before the stock market closed, Yellen also warned that stock market valuations are elevated beyond their usual historic levels, including the ratio of price to earnings. Yellen stopped short of characterizing the market’s rise in recent months as a bubble.
Even as the market was dropping, Yellen stressed that the financial system is more resilient now than it was during the financial crisis of 2008. Still, she said, “investors should be careful and, I would say, diversified in their investments.”
Yellen also struck a sober tone on other trends in the economy. She said productivity — a key barometer watched by the Fed — has been weaker than hoped. She also said the pace of new firms being created over the past decade was slower than usual.
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