SAN FRANCISCO (Reuters) – Janet Yellen, 74, is President-elect Joe Biden’s pick to be Treasury Secretary, according to two Democratic allies.
The nomination caps a storied, decades-long career for Yellen, who was often the first woman in many roles in the male-dominated fields of economics and monetary policy. Here’s some key facts about the former Federal Reserve chair and economics professor.
WHAT’S HER BACKSTORY?
After her 2013 nomination by President Barack Obama, Yellen was the first woman to head the U.S. central bank, and will be the country’s first female Treasury Secretary if confirmed by the United States Senate next year.
She grew up the daughter of a family doctor and elementary school teacher in Brooklyn. With a PhD from Yale, she has taught economics at the University of California, Berkeley, Harvard University and the London School of Economics (LSE).
She also spent years in Washington, including as chair of President Bill Clinton’s council of economic advisors, the second woman to hold the job, and in many positions at the Fed, where she met (here) her husband, Nobel Prize-winning economist George Akerlof, in 1977.
Among their many co-authored papers is one here that may be especially relevant to her job at Treasury – in it they argued for the importance of economic stabilizers during downturns, like cash for the unemployed.
Their only child is also a university economics professor.
WHAT’S HER BIGGEST POLICY IMPRINT?
Yellen was deeply involved in some of the most important changes at the Fed in its more than 100-year history, including crafting the 2012 framework that officially established 2% as the Fed’s inflation target.
Her 2014 speech here on income inequality that identified it as a hurdle to America’s democratic ideals helped move the issue to the Fed’s front burner and paved the way for the U.S. central bank’s newly revised framework that aims at “inclusive” full employment.
She was also instrumental in convincing her fellow policymakers that unemployment could drop much farther than previously thought without pushing up inflation. During her tenure as Fed chair, she and colleagues lowered their estimate of the full employment rate to 4.6% from 5.5% (it’s since come down even further).
That view allowed her to fend off both internal and external pressure for the Fed’s long-anticipated lift-off from zero rates after the Global Recession until December 2015. This effectively allowed hundreds of thousands of more Americans to get jobs than otherwise would have.
WHAT’S HER MOST CONTROVERSIAL MOMENT?
That same decision – the Fed’s December 2015 liftoff from zero rates – was arguably also Yellen’s most controversial.
In hindsight, it was seen not as too late, but too early, a move that slowed the recovery unnecessarily.
Indeed, financial markets convulsed and the economy did slow, and the Fed did not raise rates again until a full year later. But Yellen, who for years had held off critics who warned that low rates were stoking the fires of inflation and financial instability, was keen to normalize policy after years of unconventional easing.
Since then, other Fed policymakers have come to the view that the Fed ought to have waited even longer to raise rates.
HER KEY ALLIES
To make effective U.S. economic policy, Treasury secretaries need a good working relationship with the central bank, and Yellen certainly has that. Current Fed Chair Jerome Powell was a Fed governor when she was Fed chair, and they’ve kept in frequent touch over meals and by phone since she passed him the baton to lead the central bank.
She also mentored the influential New York Fed chief, John Williams, and San Francisco Fed President Mary Daly.
Internationally she’s well connected as well, having had personal dealings with many of the key financial players in Europe and elsewhere during her tenure at the Fed.
HER ACHILLES HEEL
Yellen has spent years in Washington, and testified in Congress many times, fending off her share of public and partisan criticism with even-tempered, data-based responses.
But she was never one to haunt the halls of Capitol Hill to win over hearts and minds, as Fed Chair Powell has made it his business to do.
Convincing Senate Majority Leader Mitch McConnell to pass more fiscal stimulus to fight the impacts of the COVID-19 downturn may be a formidable task.
Reporting by Ann Saphir; Editing by Heather Timmons and Andrea Ricci