Yellen said that while the unemployment rate has fallen from a peak of 10 percent in October 2009 to 6.7 percent in February, by many measures the job market remains weak. She said she and her Fed colleagues think an unemployment rate between 5.2 percent and 5.6 percent would be "consistent with maximum sustainable employment."
As she did at her first news conference two weeks ago, Yellen said she monitors measures beyond the unemployment rate in assessing the job market. These include the percentage of unemployed workers who have been out of work for more than six months and a gauge of people without jobs who have stopped looking for one or who have had to take a part-time job even though they would like full-time work.
"The recovery still feels like a recession to many Americans, and it also looks that way in some economics statistics," Yellen said. "In some ways, the job market is tougher now than in any recession."
Yellen's remarks came at a national conference on community development sponsored by the Fed and other banking regulators and the Treasury Department. Afterward, she toured a manufacturing lab at Daley College to observe a program to train students for high-tech manufacturing jobs.
Yellen presided over her first Fed interest-rate meeting on March 18 and 19. At that meeting, the Fed approved a third $10 billion cut in its monthly bond purchases to $55 billion. It's used the bond purchases to try to keep long-term rates low.
The Fed also dropped language from its statement that had said rates would likely remain low "well past" the time unemployment fell below 6.5 percent. Instead, it said it would review "a wide range of information" before starting to raise rates. It said it planned to keep short-term rates low for a "considerable time" after it stops buying bonds.
Asked at her news conference to define a "considerable time," Yellen said it "probably means something on the order of six months."
That comment rattled investors, who feared it could mean the Fed would start raising rates in the first half of 2015, earlier than many had expected.
Yellen's comments on Monday about the Fed's commitment to low rates could help convince investors that the first Fed rate increase will more likely come later.