Slow-go recovery

Janet Yellen, CEO of the Federal Reserve Bank of SF, doesn't expect the turnaround to be in the shape of a V, U or W. What she has in mind is more troublesome than all those letters:

The letter I would choose doesn't exist in our alphabet, but if I were to describe it, it would look something like an "L" with a gradual upward tilt of the base. With such a slow rebound, unemployment could well stay high for several years to come. In other words, our recovery is likely to feel like something well short of good times.

Yellen, speaking in Phoenix this morning, does say that the economy's recovery "looks like more than a flash in the pan." But...

The strength and durability of the expansion is in question. Some of the rebound is due to temporary government programs and a swing in inventory investment that will not provide an ongoing source of growth. Financial conditions have improved markedly in some respects, but many financial institutions are still hobbled with bad loans. The outlook for consumer spending is in doubt because households remain burdened with debt, and they have taken enormous hits to their wealth from declines in house and stock prices in recent years. And it's particularly sobering that labor markets continue to deteriorate badly, leaving many millions of our fellow Americans unable to find jobs.

Here's the speech.