(CNSNews.com) - "Economic growth as measured by the nation's gross domestic product increased 0.8 percent in the first quarter and 1.1 percent in the second quarter -- "and that's extremely disappointing," Federal Reserve Chair Janet Yellen told Congress on Wednesday.
She said productivity growth in particular has been "very, very low," which she called a "depressing finding." (Paycheck increases in the long run are driven by productivity growth, she noted.)
"In that sense, the economy is not doing well," Yellen told the House Financial Services Committee.
"But we are creating a lot of jobs," she said -- around 180,000 a month. And she noted that the unemployment rate, now at 4.9 percent, "has declined to the neighborhood of what most of us would consider to be full employment."
Yellen added that the labor force participation rate (62.8 percent), now hovering at a 38-year low, is feeling "significant downward pressure" from the aging of the population, as more and more Baby Boomers retire and leave the labor force.
"Aging of the population maybe one factor," Rep. Andy Barr (R-Ky.) agreed. "The other factor is that unemployment is coming down, not for a good reason, but for the wrong reason -- namely, that there's a frustrated workforce out there that's completely given up looking for work."
Barr said he worries that some of the drag on the economy is due to "regulatory overreach."
"Let me give you an example of what I'm talking about," he told Yellen. "In the post Dodd-Frank world, financial firms are supervised by multiple agencies, more than ever before -- the Federal Reserve, the FDIC, the OCC, the NCOA, the SEC, the CFTC, the CFPB, the FSOC.
"These agencies are promulgating regulations, they're performing examinations. With respect to rule makings, the approach of market regulators sometimes conflicts with the safety and soundness regulators, which in turn can conflict with the consumer protection regulator.
"And on supervision, often the substance of examinations overlap, but the time tables don't. And so data collection among financial regulators can be duplicative and uncoordinated. So, this is not only a burden on financial firms -- an undue burden on financial firms that may be a drag on our economy, but it also may lead to gaps in supervision." He pointed to the problems at Wells Fargo.
Barr asked Yellen, "Do you acknowledge that maybe the lack of regulatory coordination and inefficiency maybe a problem? And secondly, what do you think about proposals to consolidate or at least reduce the number of financial regulators to reduce regulatory incompetence, to reduce regulatory duplication or conflicts, or at least consolidate examinations and data collection efforts between and among regulators?"
Yellen responded, "Well we have a complicated regulatory system, there's no doubt about it. And we recognize that the issues you're discussing can create a great deal of burden."
Multiple questions about fiinancial regulation came up throughout the three-and-a-half hour hearing, as some lawmakers expressed concern about the burden placed on small community banks.