Perspective on Yellen
By David Henderson
Donna Borak of CNN Money interviewed me early in February for her piece on outgoing Federal Reserve chair Janet Yellen.The piece is “Yellen’s historic legacy: Wise caution and a successful recovery,” CNN Money, February 3, 2018.
Here’s the one sentence she used, which is right at the end of the article:
“Time won’t tell,” said David Henderson, a research fellow with the Stanford University’s Hoover Institution. “Those are accomplishments.”
That’s accurate. Ms. Borak had asked me more than once if I would say, in evaluating Yellen’s time in office, that “time would tell.” I sensed that she was looking for someone to say that. But I didn’t think that about her two major accomplishments: presiding over an economy without a recession and with low and falling unemployment and keeping inflation low and steady. So after she asked me again whether time would tell, I said that on those two issues, time won’t tell. We have the evidence.
By the way, one thing I think I said is that it’s technically incorrect, as I understand the terminology, to describe the growth of the economy during Yellen’s watch as a “recovery,” as the CNN title suggests. What I learned while working as a senior economist under Council of Economic Advisers chair Martin Feldstein is that once real GDP (we used real GNP back then) has reached its old level after a recession, the terminology switches from recovery to expansion. When Yellen came along, we were well into an expansion.