The decline in headline unemployment to 6.3% overstates the improvement in the labor market, says Yellen, explaining why the Fed plans on holding rates low even after the rate falls to 5.5%.
At least part of the decline in the rate represents what Yellen calls "shadow unemployment" - discouraged workers who have exited the labor force, but would return if prospects improved.
Markets are starting to take some direction, with the S&P 500 (SPY) now ahead 0.6% and the 10-year Treasury yield sinking four basis points to 2.61%.
Asked an interesting question about whether Fed policy is at odds with itself - with one hand, the Fed wants credit to flow to help boost the economy, but with the other hand is stifling credit with new regulations - Yellen says the boosted oversight is needed to prevent another financial crisis, and from her seat credit is broadly available.
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