Yellen was nominated by President Obama to succeed Ben Bernanke as Chairwoman of the United States Federal Reserve. On January 6, 2014, the U.S. Senate confirmed Yellen's nomination. She was sworn in on February 3, 2014, making her the first woman to hold the position.
Early life and education
Yellen was born to a Polish Jewish family in New York City's Brooklyn borough, as the daughter of Anna Ruth (née Blumenthal; 1907-1986), an elementary school teacher and Julius Yellen (1906-1975), a family physician, who worked from the ground floor of their home. Her mother quit her job to take care of Janet and her older brother, John. She graduated from Fort Hamilton High School in the Bay Ridge section of Brooklyn as a valedictorian. She graduated summa cum laude from Pembroke College in Brown University with a degree in economics in 1967. At Brown, Yellen had switched her planned major from philosophy to economics and was particularly influenced by professors George Borts and Herschel Grossman. She received her Ph.D. in economics from Yale University in 1971. Her dissertation was titled "Employment, Output and Capital Accumulation in an Open Economy: A Disequilibrium Approach" under the supervision of Nobel laureates James Tobin and Joseph Stiglitz, who later called Yellen one of his brightest and most memorable students. Two dozen economists earned their Ph.D from Yale in 1971, but Yellen was the only woman in that doctoral class.
From June 14, 2004, until 2010, Yellen was the President and Chief Executive Officer of the Federal Reserve Bank of San Francisco. She was a voting member of the Federal Open Market Committee (FOMC) in 2009. Following her appointment to the Federal Reserve in 2004, she spoke publicly, and in meetings of the Fed's monetary policy committee, about her concern about the potential consequences of the boom in housing prices. However, Yellen did not lead the San Francisco Fed to "move to check [the] increasingly indiscriminate lending" of Countrywide Financial, the largest lender in the U.S.
In a 2005 speech in San Francisco, Yellen argued against deflating the housing bubble because "arguments against trying to deflate a bubble outweigh those in favor of it" and predicted that the housing bubble "could be large enough to feel like a good-sized bump in the road, but the economy would likely be able to absorb the shock." In 2010, Yellen told the Financial Crisis Inquiry Commission that she and other San Francisco Fed officials looked for guidance from Washington because "she had not explored the San Francisco Fed's ability to act unilaterally," according to the New York Times. Yellen conceded her previous misjudgment of the housing crisis to the Commission: "I guess I thought that similar to the collapse of the stock market around the tech bubble, that most likely the economy could withstand [the housing collapse] and the Fed could move to support the economy the way it had after the tech bubble collapsed."
Bullard's statement was interpreted as a possible shift within the FOMC balance between inflation hawks and doves. Yellen's pending confirmation, along with those of Peter A. Diamond and Sarah Bloom Raskin to fill vacancies, was seen as possibly furthering such a shift in the FOMC. All three nominations were seen as "on track to be confirmed by the Senate".
On October 4, 2010, Yellen was sworn in for a 4-year term ending October 4, 2014. Yellen simultaneously began a 14-year term as a member of the Federal Reserve Board that will expire on January 31, 2024.
On October 9, 2013, Yellen was officially nominated to replace Bernanke as Chair of the Federal Reserve. During the nomination hearings held on November 14, 2013, Yellen defended the more than $3 trillion in stimulus funds that the Fed had been injecting into the U.S. economy. Additionally, Yellen testified that U.S. monetary policy is to revert towards more traditional monetary policy once the economy is back to normal.
On December 20, 2013, the U.S. Senate voted 59-34 for cloture on Yellen's nomination. On January 6, 2014, she was confirmed as Chair of the Federal Reserve by a vote of 56-26, the narrowest margin ever for the position. In addition to being the first woman to hold the position, Yellen is also the first Democratic nominee to run the Fed since Paul Volcker became chairman in 1979. After being elected by the Federal Open Market Committee as its chair on January 30, 2014, she took office on February 3.
On December 16, 2015, while Yellen was chair of the Federal Reserve, the latter increased its key interest rate for first time since 2006.
Trump considered renominating Yellen for another term, but on November 2, 2017 nominated Jerome Powell to succeed Yellen when her term ended on February 3, 2018. After Trump's decision, Yellen announced that she would leave the Federal Reserve Board of Governors at the end of her term as chair. Yellen's 5-foot 3-inch height was reportedly a factor in Trump's decision.
Yellen received generally high marks from supporters and critics alike during her tenure. According to research conducted by The Washington Post in December 2017, unemployment figures showed the greatest improvement since 1948 and, in comparing "S&P 500 cumulative (inflation-adjusted) returns under the past four Fed chairs. Yellen has the highest return... no other recent Fed chair has seen the market climb this far this fast as it did under Yellen."
Yellen delivers farewell speech to Federal Reserve Staff in 2018
After the Federal Reserve
On February 2, 2018, Brookings Institution announced that Yellen would be joining the think-tank as a Distinguished Fellow in Residence. She will be affiliated with the Hutchins Center on Fiscal and Monetary Policy, joining her predecessor and former Federal Reserve Chair Ben Bernanke.
Secretary Jack Lew and Federal Reserve Chair Janet Yellen
Yellen is considered by many on Wall Street to be a "dove" (more concerned with unemployment than with inflation) and as such to be less likely to advocate Federal Reserve interest rate hikes, as compared, for example, to William Poole (former St. Louis Fed president) a "hawk". However, some predicted Yellen could act more as a hawk if economic circumstances dictate.
Yellen is a Keynesian economist and advocates the use of monetary policy in stabilizing economic activity over the business cycle. She believes in the modern version of the Phillips curve, which originally was an observation about an inverse relationship between unemployment and inflation. In her 2010 nomination hearing for Vice Chair of the Federal Reserve Board of Governors, Yellen said, "The modern version of the Phillips curve model--relating movements in inflation to the degree of slack in the economy--has solid theoretical and empirical support."
In a 1995 meeting of the Federal Open Market Committee while serving on the Board of Governors of the Federal Reserve System, Yellen stated that occasionally letting inflation rise could be a "wise and humane policy" if it increases output. At the same meeting she also stated that each percentage point reduction in inflation results in a 4.4 percent loss of Gross Domestic Product.
Honors and awards
Yellen 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. She received an Honorary Doctorate from the London School of Economics in May 2015, making her and her husband "the first wife and husband team to hold honorary doctorates from the School".
1971-1976 Assistant Professor, Department of Economics, Harvard University
External service and assignments
President and CEO, Federal Reserve Bank of San Francisco
Fellow, American Academy of Arts and Sciences, 2001
Vice President, Western Economics Association, 2001
Fellow, Yale Corporation 2000-
Member, National Academy of Sciences Panel on Ensuring the Best Presidential Science and Technology Appointments, 2000
Research Associate, National Bureau of Economic Research, 1999-
Advisory Board, Center for International Political Economy, 1999-
Advisory Board, Brookings Panel on Economic Activity, 1999
Chair: Economic Policy Committee of the Organization for Economic Cooperation and Development 1997-1999
President's Interagency Committee on Women's Business Enterprise (1997)
Member and adviser: Brookings Panel on Economic Activity (senior advisor); Advisor Panel in Economics, National Science Foundation;
Adviser: Congressional Budget Office
Research fellow: Yale University, and Massachusetts Institute of Technology
Trustee of the Economists for Peace and Security
The Fabulous Decade: Macroeconomic Lessons from the 1990s (with Alan Blinder), The Century Foundation Press, New York, 2001. ISBN0-87078-467-6
"East Germany In From the Cold: The Economic Aftermath of Currency Union" (with George Akerlof, Andrew Rose, and Helga Hessenius), Brookings Papers on Economic Activity 1991:1.
"How Large are the Losses from Rule of Thumb Behavior in Models of the Business Cycle?" (with George Akerlof) in Willima Brainard, William Nordhaus, and Harold Watts, eds., Money, Macroeconomics and Economic Policy: Essays in Honor of James Tobin, Cambridge, Mass.: MIT Press (1991). ISBN0-262-02325-3
"Monetary Policy: Goals and Strategy," Business Economics (July 1996).
"Trends in Income Inequality and Policy Responses," Looking Ahead, October 1997; reproduced in James Auerbach and Richard Belous, eds., The Inequality Paradox: Growth of Income Disparity, National Policy Association, 1998
"The Continuing Importance of Trade Liberalization," Business Economics (1998).
Rose, Andrew K. & Yellen, Janet L., 1989. "Is there a J-curve?," Journal of Monetary Economics, Elsevier, vol. 24(1), pages 53-68, July.
Akerlof, George A., and Janet Yellen, 1986. "Efficiency Wage Models of the Labor Market". Orlando, Fla.: Academic Press.
Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205
McCulloch, Rachel & Yellen, Janet, 1982. "Can capital movements eliminate the need for technology transfer?," Journal of International Economics, Elsevier, vol. 12(1-2), pages 95-106, February.
Nomination of Janet L. Yellen: Hearing before the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Thirteenth Congress, First Session, on Nomination of Janet L. Yellen, of California, to be Chairman of the Board of Governors of the Federal Reserve System, November 14, 2013