(CNSNews.com) - Janet Yellen, the chairman of the Board of Governors of the Federal Reserve System, told the Joint Economic Committee of Congress today that she expects the economy to grow faster this year than it did last year even though real Gross Domestic Product is currently estimated to have grown at an annual rate of only 0.1 percent in the first quarter.
That absence of economic growth at the beginning of this year, Yellen said, can be blamed to some degree on the weather—and she was not talking about global warming.
“The economy has continued to recover from the steep recession of 2008 and 2009,” Yellen said in her opening statement. “Real gross domestic product growth stepped up to an average annual rate of about 3 and a quarter percent over the second half of the year, a faster pace than in the first half and the preceding two years.
“Although real GDP growth is currently estimated to have paused in the first quarter of this year,” Yellen said, “I see that pause as mostly reflecting transitory factors, including the effects of the unusually cold and snowy winter.
“With the harsh winter behind us,” she continued, “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. On cautionary note, though, is that readings on housing activity—a sector that has been recovering since 2011—have remained disappointing so far this year and still bear watching.”
“Looking ahead, I expect that economic activity will expand at a somewhat faster pace this year than it did last year, that the unemployment rate will continue to decline gradually and that inflation will begin to move up toward 2 percent,” she said. “A faster rate of economic growth this year should be supported by reduced restraint from changes in fiscal policy, gains in household net worth from increases in home price and equity values, a firming in foreign economic growth, and further improvements in household and business confidence as the economy continues to strengthen.
“Moreover,” she said, “U.S. financial conditions remain supportive of growth in economic activity and employment.”
“As always,” she said, “considerable uncertainty surrounds this baseline economic outlook.”
Later in the hearing, Sen. Amy Klobuchar (D.-Minn.) asked Yellen about her statement that the cold winter weather had caused a slow-down in the economy in the first quarter and whether she expected to see a better economy with the arrival of better weather.
"Yes, definitely," said Yellen. "We have heard many different pieces of evidence as well as what we see in broader statistics that suggest that the weather played a role. And recent data is certainly much more encouraging on a wide range of fronts, from car sales, retail sales, industrial production. So, I am quite hopeful that we will see, and are seeing, a pick up in economic activity. "
On Tuesday, the day before Yellen testified, the White House released the administration's National Climate Assessment, arguing that the Earth is warming because of human activity and that action must be taken to reduce "greenhouse gas" emissions on a global scale.
In the last six quarters, according to the Bureau of Economic Analysis, real GDP has grown at an annual rate 0.1 percent, 1.1 percent, 2.5 percent, 4.1 percent, 2.6 percent, and 0.1 percent.