Economists and other analysts are sounding off following Monday’s news that President-elect Joe Biden has selected former Federal Reserve Chairwoman Janet Yellen to lead the Treasury Department.
Biden plans to nominate Yellen, said a Wall Street Journal article citing unnamed sources, and other news outlets also reported that she was picked. If confirmed by the U.S. Senate, she would become the first woman to serve as Treasury secretary.
Below are some initial reactions, as the main U.S. stock gauges
closed with gains on Monday after moving up toward session highs as the headlines about Yellen hit. Equities were rising again Tuesday.
• “She is well within the orthodoxy of the economics community, and I suspect that fact along with her familiarity will lead to a largely positive response from financial markets. More broadly, from what we have seen so far, Biden appears to be mainly choosing old Democratic hands to fill his most vital Cabinet and White House posts, people from the Obama (and in some cases, even the Clinton) years. Progressives had hoped to wield major influence in the next administration, but if Biden’s personnel choices so far are any indication, he intends to govern more from what constitutes the middle of the Democratic Party today than to push the envelope far to the left.” — Stephen Stanley, chief economist at Amherst Pierpont
From MarketWatch’s archives, December 2018:Yellen is worried about the next financial crisis
• “There’s a lot to be excited about, but here’s a big one: As a former Fed chair, she has great relationships across the globe. She can start repairing the damage in economic diplomacy from the past four years.” — Michael R. Strain, director of economic policy studies at the American Enterprise Institute, in a tweet
• “Ms. Yellen’s vast experience as a labor economist will be invaluable as the new administration and the Fed attempt to help the labor market regain its pre-pandemic footing. … Overall, Ms. Yellen will be a welcome addition to the administration at a time when the economy continues to be adversely affected by Covid-19 and needs ongoing support from both monetary and fiscal policy.” — Rubeela Farooqi, chief U.S. economist at High Frequency Economics
• “We expect her to easily win Senate confirmation. To us, Yellen is likely to support restarting 13(3) loan programs like Main Street and the Muni facility. She also could support help for housing. We see her economic background giving her more credibility to negotiate a stimulus package.” — Jaret Seiberg, analyst at Cowen Washington Research Group
• “Investors should embrace former Fed Chair Yellen as the next Secretary of the Treasury. If nothing else, her stock track record is very good: the S&P 500 compounded at 13 percent/year on a price basis during her tenure, even as she raised rates. Our only concern is that as a trained economist and former central banker, Yellen is not the sort of individual who will champion novel disruptive technologies like a U.S. central bank digital currency. China’s lead on this count will therefore continue to grow, with unforeseeable consequences for the greenback.” — Nicholas Colas, co-founder of DataTrek Research
• “The market responded positively to the news of Yellen’s nomination. This reflects the market’s familiarity with Yellen as Fed Chair from 2014 to 2018. … We conclude by viewing Yellen’s nomination as a moderate selection, which should mitigate the risk of any material progressive rules or regulations that would be disruptive to the banking and financial services sectors.” — Edwin Groshans, analyst at Height Capital Markets
• “Yellen is an excellent choice for Treasury secretary. She was my boss when I was a Senior Economist for International at the Council of Economic Advisors in 1998-99. The most wise boss ever!” — Nouriel Roubini, New York University economics professor often called “Dr. Doom,” in a tweet
• “Great to see there will be an experienced hand at @USTreasury. Every Treasury secretary has a learning curve (even former Fed chairs) but this is an excellent selection.” — Tony Fratto, founder of Hamilton Place Strategies and a former spokesman in the George W. Bush White House, in a tweet
This is an updated version of a report first published on Nov. 23, 2020.