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Extraordinary Monetary Policy Cannot Close The Growth Gap

Press Release

Location: Washington, DC

Rep. Kevin Brady (R-TX), Chairman of the Joint Economic Committee, today criticized the Federal Reserve's decision to continue its policy of "quantitative easing."

"Further quantitative easing by the Fed won't close America's troubling growth gap, nor will it lower unemployment. Why the Fed continues to tie extraordinary monetary actions to the unemployment rate, when it has stated repeatedly one cannot impact the other, is beyond me."

The growth gap refers to: (1) the difference between the rates of economic growth and job creation in an average post-war recovery and in the current recovery, and (2) the possibility that the ability of our economy to grow in future may be permanently lower.

In the 3½ years since the recession ended, real GDP increased by 7.5%. During the comparable period in other post-war recoveries, real GDP increased by an average of 17.5%. Similarly, the U.S. economy has generated 6.4 million private sector jobs since the cyclical low in February 2010. In the comparable 36 months, an average recovery would have generated 10.4 million private jobs.

***Rep. Brady is the author of H.R.1174, the Sound Dollar Act, which would focus the Federal Reserve on maintaining price stability. He is also the author of H.R.1176 to create the Centennial Monetary Commission which would evaluate Fed policies for their effectiveness in monetary policy since its founding, 100 years ago.

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