Infrastructure, innovation cited as keys to generating economic growth

Congress may consider policies to generate a sustained boost in economic growth, including improving the nation’s infrastructure and supporting innovation and adoption of new technologies, the outgoing chairman of the Federal Reserve Board said in testimony Wednesday.

She made no mention of reducing or raising taxes.

Testifying before the Senate/House Joint Economic Committee, Fed Chair Janet Yellen – who has announced she will resign from the board once her nominated successor as chair, Jerome Powell, is confirmed by the Senate – said real gross domestic product (GDP) growth has been “disappointingly slow” during the recent economic expansion relative to earlier decades.

“One key reason for this slowdown has been the retirement of the older members of the baby-boom generation and hence the slower growth of the labor force,” Yellen said in her prepared remarks. “Another key reason has been the unusually sluggish pace of productivity growth in recent years.”

Yellen said the nation must address these underlying causes to generate sustained economic growth, but “without causing inflation that is too high.”

She said to do that, Congress could consider policies such as improving the nation’s infrastructure, supporting innovation and the adoption of new technologies, encouraging business investment and capital formation, and raising the quality of the nation’s educational system.

The Current Economic Outlook and Monetary Policy; Chair Janet L. Yellen