Yellen: Federal Budget Must Boost Growth, Jobs

The federal budget needs to be "on a sustainable long-run trajectory" that allows policy actions to boost growth and create jobs without snuffing out the recovery, Federal Reserve Board vice chairwoman Janet Yellen told a group in San Francisco Tuesday.

"It is crucial that the federal budget be put on a sustainable long-run trajectory, and we should not postpone charting that course," she said. Failure would mean "serious economic costs and risks in the long term and possibly sooner."

The nation faces "serious headwinds," she said, and the Fed is "moving vigorously" to offset them even as households deleverage and corporations resist investing. While growth is expected to pick up in the last half of 2011, unemployment is seen dropping slowly, "remaining painfully high for many years to come."

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