WASHINGTON — Janet L. Yellen, the Federal Reserve chairwoman, highlighted the continued strength of job growth in an upbeat report to Congress on Wednesday on the state of the American economy.
The economy added 180,000 jobs per month during the first half of 2017, about the same pace as the first half of last year, even as the unemployment rate fell back to a pre-recession level.
In light of the continued growth, the Fed intends to keep raising its benchmark interest rate and to reduce its investment holdings, Ms. Yellen said in prepared testimony. She did not offer new information about the timing of the Fed’s next steps. Analysts expect the Fed to start shaving its bond portfolio in September.
“Looking ahead, my colleagues on the F.O.M.C. and I expect that, with further gradual adjustments in the stance of monetary policy, the economy will continue to expand at a moderate pace over the next couple of years,” Ms. Yellen said, referring to the Federal Open Market Committee.
Ms. Yellen’s prepared testimony hewed closely to the contents of the Fed’s recent public statements. She will answer questions from the House Financial Services Committee on Wednesday, and she will appear before the Senate Banking Committee on Thursday.
She said economic growth remained moderate, an improvement after a slow start to the year. Consumer spending has picked up, as has business investment, and the United States is benefiting from stronger growth in other countries.
“A strengthening in economic growth abroad has provided important support for U.S. manufacturing production and exports,” she said.
Ms. Yellen noted a recent downturn in inflation, which she said the Fed was following closely. But she added that officials regarded it as an anomaly; the Fed predicts stronger inflation next year.
Ms. Yellen also noted that broader measures of the labor market were improving. The unemployment rate, 4.4 percent in June, counts people actively seeking work. One of the broader measures adds people who are not job-hunting but say they would like to work and part-time workers who want full-time work. This group comprised 8.6 percent of the work force in June; a decade ago, in June 2007, it was 8.4 percent.
The unemployment rate among African-Americans stood at 7.1 percent in June, the lowest rate since April 2000 — although Ms. Yellen noted that it remained above the national unemployment rate.
Wage growth remains surprisingly weak. Average hourly earnings increased by 2.5 percent during the 12 months ending in May. A broader measure including benefits rose 2.25 percent during the 12 months ending in March, the Fed said in a biannual policy report sent to Congress with Ms. Yellen’s testimony. Those data suggest a significant number of American adults are returning to the labor force. Only 62.8 percent of adults were either working or looking for work in June, well below the 66 percent participation rate a decade ago.
Ms. Yellen’s testimony included a pre-emptive response to one likely line of questioning. The chairman of the House committee, Representative Jeb Hensarling, Republican of Texas, supports legislation that would require the Fed to publish a formula it would use to determine the level of its benchmark interest rate. Mr. Hensarling cited one such rule as evidence the Fed should end its stimulus campaign more quickly.
Ms. Yellen pointed members of Congress to the lengthy rebuttal in the Fed’s monetary policy report, which says the Fed uses a variety of policy rules to guide decision-making, but the recommendations vary widely. It cited one rule that suggests the Fed is raising rates too quickly.
“Such prescriptions cannot be applied in a mechanical way,” she said in her testimony. “Their use requires careful judgments.”