Federal Reserve Chair Janet Yellen
She Was Once the Most Powerful Woman in the World
Janet Yellen was Federal Reserve chair from February 3, 2014 to February 3, 2018. President Trump nominated Jerome Powell to succeed her. But reappointing her should have been a given. During her tenure, the unemployment rate fell from 5.6 percent to 4.4 percent. By the end of 2017, the economy was growing at 3.1 percent. That's more than the ideal growth rate of 2-3 percent. The nation's gross domestic product increased from $16 trillion to $17 trillion. Core inflation was only 1.7 percent. The Dow Jones Industrial Average set 204 record highs during her tenure.
But Trump preferred someone who would deregulate banks. He also wanted someone who would keep interest rates low. Yellen supported financial regulation such as the Dodd-Frank Wall Street Reform Act. She would continue to raise the fed funds rate to its normal range of 2 percent.
On February 5, 2018, Dr. Yellen became the Distinguished Fellow in Residence at the Economic Studies program of the Brookings Institution. She is affiliated with the Hutchins Center on Fiscal and Monetary Policy.
Why She Was Important to the U.S. Economy
As the spokesperson for the Fed, Yellen was the country's premier economic expert. Her words swayed the stock market, interest rates, and the value of the dollar. That made her the most powerful person in the United States and the global economy.
The Role of the Federal Reserve Chair
The Fed chair is expected to lead the Fed's board and the Federal Open Market Committee that sets and executes monetary policy. Chairs are appointed for four-year terms but normally wind up serving eight or more. For this reason, they are allowed to take a long-term view, independent of voters and short-term political pressure.
That's good, because the Fed's tools act slowly, sometimes taking months to filter down into the general economy. Consistent direction and management of expectations are just as important as the steps taken themselves. Lack of this, known as stop-go monetary policy, caused the uncertainty that created stagflation in the 1970s.
Why Yellen Made a Good Fed Chair
Of all the Fed Board members, Yellen was most accurate in forecasting that expansive monetary policy would not create inflation. That ability to understand how the economy works and to distinguish real threats like unemployment from imagined ones, like inflation, is critical as a Fed chair. She was able to manage expectations by staying focused on her path.
In addition, Yellen has been a long-standing advocate of financial regulation. She oversaw the Fed's implementation of Dodd-Frank. She was consistent with Bernanke’s policies, so her actions ensured a smooth transition. She had been to every one of the former chairman's policy meetings. Bernanke always consulted closely with her when making decisions.
Dr. Yellen was vice chair of the Board of Governors of the Federal Reserve System since October 4, 2010. This four-year term coincided with a 14-year term as a board member. She was the president and chief executive officer of the Federal Reserve Bank of San Francisco from 2004 to 2010.
Dr. Yellen is Professor Emeritus at the University of California at Berkeley. There, she's the Eugene E. and Catherine M. Trefethen Professor of Business and Professor of Economics. She has been a faculty member since 1980. She's written on a wide variety of macroeconomic issues and is an expert in the causes, mechanisms, and implications of unemployment.
President Bill Clinton appointed Dr. Yellen as the chair of the Council of Economic Advisers from 1997 to 1999. She was the chair of the Economic Policy Committee of the Organization for Economic Cooperation and Development at the same time.
Yellen's Early Career
Dr. Yellen graduated summa cum laude from Brown University with a degree in economics in 1967. She received her Ph.D. in economics from Yale University in 1971. She received the Wilbur Cross Medal from Yale in 1997, an honorary doctor of laws degree from Brown in 1998, and an honorary doctor of humane letters from Bard College in 2000.
Dr. Yellen was an assistant professor at Harvard University from 1971 to 1976 and a staff economist for the Federal Reserve Board from 1977 to 1978. She was a faculty member at the London School of Economics and Political Science from 1978 to 1980.
Dr. Yellen was a faculty member at Berkeley from 1980 to 1994. She then joined the Federal Reserve Board from 1994 to 1997. She has served as president of the Western Economic Association, vice president of the American Economic Association, and a fellow of the Yale Corporation. She is a member of both the Council on Foreign Relations and the American Academy of Arts and Sciences.