WASHINGTON – The particularly hard-hit Los Angeles housing market provides a glimpse of why the nationwide economic recovery has progressed more slowly than expected, Federal Reserve Board Governor Sarah Bloom Raskin said Thursday.
“The financial crisis was unprecedented since the Great Depression, and the recession was extraordinarily deep, even compared with other severe recessions in the postwar period,” Raskin told listeners in Los Angeles, according to prepared text of her remarks, released by the Fed. “Consequently, we have had much more ground to make up relative to other economic downturns. However, the current recovery has been even slower than would be expected given its characteristics. An important factor explaining this slowness has likely been the severe contraction in the housing market, which has been the largest since the Great Depression.”
The Los Angeles market experienced even greater housing market retraction and its recovery arc is accordingly tougher as well, Raskin said, but she cited two consecutive years of growth in the tonnage moving through the Port of Los Angeles as evidence that the city is on its way back thanks in part to the accommodative monetary policy of the Fed. The Fed has kept the federal funds rate very low, which Raskin credited for stimulating overall economic growth. Raskin said the Fed will continue to pursue that goal.
“In light of the economic hardships that have been endured in Los Angeles and nationwide,” she said, “the Federal Reserve remains fully committed to doing everything it can to promote maximum employment in the context of price stability.”