Congress' Top 3 Complaints About the Slow Economic Recovery

UNITED STATES - May 22 : Rep. Richard Hanna, R-NY., and Rep. Kevin Brady, R-TX., listen to Ben Bernanke, Chairman, Board of Governors of the Federal Reserve System as he testifies before the Joint Economic Committee in the Dirksen Senate Office Building in Washington, D.C. on the economic outlook.  (Photo By Douglas Graham/CQ Roll Call)
Douglas Graham/CQ Roll CallRep. Richard Hanna (R-N.Y.) and Rep. Kevin Brady (R-Texas) listen to Fed Chairman Ben Bernanke.
Federal Reserve Chairman Ben Bernanke testified Wednesday before Congress on the state of the economy, and, to paraphrase, the economic recovery has a long road ahead.

But although Big Ben managed most of the show, Congress added its own two cents for the first few minutes -- and legislators are not happy. Straight from the horse's mouth (i.e., that of Chairman of the Joint Economic Committee Kevin Brady), here are Congress' top three complaints about our economic recovery.

1. There's $3,604 Missing From Your Paycheck

Employment is an important economic indicator, but it tends to get extra-special congressional consideration. That's because citizens (read: "voters") love to hear that their employment odds are up, but neither Congress nor the Federal Reserve has managed to significantly move these numbers.

Although unemployment rates have dropped more than half a percentage point to 7.5 percent in the last year, Brady pointed to "red flags which we shouldn't ignore" -- red flags like the fact that 20 million Americans can't find full-time jobs, labor force participation recently hit a 35-year low, and an extra-sluggish recovery has left earnings lagging.

Since the economy began to rebuild four years ago, real disposable income for "Joe Six Pack" is up $745. According to Brady, Joe would have $3,604 more in his pocket by now if this post-recession period mirrored other recent recoveries.

2. Wall Street's Roaring, Main Street's on Food Stamps

Keeping things in real-person perspectives, Brady went head-to-head with Mr. Market's maxed-out metrics. In the same time that the S&P 500 Total Return Index has soared 75 percent, GDP growth estimates have dropped a full percentage point to 2.2 percent.

Eight million more Americans are now receiving food stamps, which now help feed 15 percent of the nation's citizens. In Brady's words, "There's no question that Wall Street is roaring, but Main Street continues to struggle."

Bank bailouts aside, it makes sense that stock markets would recover faster than other economic indicators. The stock market represents a liquid expectation of all current and future earnings of an economy, while jobs and GDP numbers are more directly linked to our past and present.

3. Bubbles Are Brewing

If you think Congress is furious now, just you wait. Brady says quantitative easing has "run out of steam," and he's ready for Bernanke to back away from the policy. Although Brady concedes that monetary measures may have had some role in our recovery, he says their heyday is over.

Low interest rates may have pulled the housing market out of its misery, but savers are beginning to feel the squeeze in their accounts' abysmal rates. And despite near-zero returns, American banks currently hold $1.9 trillion in excess reserves on their books.

In the long term, Brady worries that the Fed's actions today may be inflating new asset price bubbles for tomorrow.

While banks' books have their issues, the Federal Reserve has problems of its own. Since 2009, the Fed has purchased 24 percent of all newly issued Treasuries. Brady warns, "When growth picks up, and we hope it does, the Fed cannot raise its target rate for Federal funds and sell long-term Treasuries without recognizing substantial losses on its balance sheet, creating uncertainty."

So: What Now?

Brady and Bernanke are two chairs at opposite ends of the table. Brady finished up his opening remarks with "Today, we intend to explore the Fed's exit strategy and timing in detail" -- and Bernanke did anything but. His statement -- "Withdrawing policy accommodation at this juncture would be highly unlikely" -- helped move the Dow Jones Index up 155 points despite his hints at reduced bond-buying.

Chairman Bernanke has openly admitted to the flaws and failings of monetary policy, but it's still the most agreeable option available. And while a slow and steady recovery won't create 20 million jobs overnight, it's the best Ben can do.

You can follow Motley Fool contributor Justin Loiseau on Twitter @TMFJLo.

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11 Comments

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chris1011

It was the Republican plan for the economy to fail. McConnel said so right from the start. It worked beautifully, so what do you baggers have to scream about. It's the outcome you all wanted, no?

May 24 2013 at 5:39 PM Report abuse -2 rate up rate down Reply
franzr00

Some of it is very simple. Not everyone on Main Street votes. But those on Wall Street can contribute to members of Congress, and that is what counts for members of Congress.

And the stock market recovery is all that counts for the 1%, and Congress listens to them also.

Meanwhile, many members of Congress want more and more austerity, which will only make the economic situation worse. Europe is finding that out already.

May 24 2013 at 2:45 PM Report abuse +1 rate up rate down Reply
2 replies to franzr00's comment
setanta54s_back

if you WERE familiar with ALL THE CRAP associated with the eu,their work week,rules and regulations,PAY SCALE,PENSIONS etc,
what they're calling AUSTERITY,
we call the NORM.

making MORE FEDERAL RULES,obuMMer care mandate,and MORE TAXES is a LARGE part of the PROBLEM HERE.

May 24 2013 at 3:29 PM Report abuse -2 rate up rate down Reply
setanta54s_back

fraud street remains a BIG obummer backer--why you think all these months of propping it up went on ?
if fraud street were conservative they'd be punished the same way houston was and car dealerships CLOSEDetc.
and also have the IRS etc up their collective arses.

May 24 2013 at 4:35 PM Report abuse -2 rate up rate down Reply
mekakes

Congress should get America back to work, fixing our collapsing infrastructure, rehiring teachers, firefighters and other slashed jobs, and cut back on the obscene purchases of swatt gear and hire technology overkill, demonstrating so clearly in the Boston bombing arrest. Do all cops need tank like vehicles and military suits and gear, or are you just appeasing your military contractors by steering business to police?
Enough with the security stocking over kill. Let's get back to basics -- like the hundreds on bridges on the verge of collapse. It ain't sexy, but we have defered maintenance in favor of war for ten years now.

May 24 2013 at 2:04 PM Report abuse +1 rate up rate down Reply
1 reply to mekakes's comment
setanta54s_back

you better believe they need all that military gear on and on--
THEY WILL ENFORCE the shut down of a once free society when obummer and crew decides IT'S TIMe.
federal money designated for this and their using it.


AND THE WAR has nothing to do with A STATE'S corruption and INCOMPETENCE in THEIR HANDLING of STATE MONIES designated for infrastructure.
it simply disappears exactly like blancO's LA/newOleans.
where'd THAT MONEY GO for the levees ?
think we've forgotten THAT BS ?
one stream mediyuuh wouldn't TOUCH THAT never mind that newOleans wasn't hit by the hurrican either---their unmaintained levees FAILED.

May 24 2013 at 4:42 PM Report abuse -2 rate up rate down Reply
moretrorun

The Federal Reserve had no business speculating on the value of Treasury Bonds especially while at rock-bottom interest rates. Now, they will lose money and likely have to disclose its exit either before or after. It is ignorance to just now realize the effect it has had on individual's bank accounts and corporate reserves. It is nice to hear that they finally realize that it hasn't been a blockbuster if it has helped at all. I submit that it has done more harm than good.

May 24 2013 at 1:58 PM Report abuse +1 rate up rate down Reply
hsstempe

i shut down my company, sent the employees home to draw their odumass bucks and i am not far behind them. cannot wait to be fined for not purchasng health care so the dems/liberals/idiots we elect to give us another tax increase. . My clothing line is like an old comedy, we are wearing barrels or thrift store stuff at a buck a pop from Goodywill. thanks to our elected a******* it's going to get worse. houseing recovery my ass! deep pockets bettin on a repeat of the same thing that caused the lst one. who finances a car for 7 years anyway. STUPID. THATCHER got it right and THEY meaning everyone of the politicos have already run out of everyone else's money. look at the stats they DONT publish. fire this whole administration and give them really really short term limits.

May 24 2013 at 12:53 PM Report abuse -2 rate up rate down Reply
cja032170

what funny is the fact that the states with the most SSD recipients, lowest educational scores, and poorest healthcare are RED states yet tea baggers and GOP sheeple feel the "liberals" are the ones on the take...LMAO 2/3 of all tax income comes from BLUE states..now who supports who?

May 24 2013 at 12:43 PM Report abuse +4 rate up rate down Reply
2 replies to cja032170's comment
mily469

so very true. but those are facts and to them facts are nothing but liberal bias.

May 24 2013 at 12:48 PM Report abuse +6 rate up rate down Reply
setanta54s_back

he heeeeeeeeeeee LM@O !
GUESS WHAT c_JA ?

conservatives DON'T NEED THE LIBS or their bankrupt,crime ridden STATES.
but the libtards most certainly DO NEED THE CONSERVATIVES.

blue state me arse....
diMs are desperate to CONVERT TX by any means necessary to another diM cesspool so as to nget their grimey hands on WHAT WORKS and level it to their LOWEST LEVEL.

May 24 2013 at 3:33 PM Report abuse -6 rate up rate down Reply