Janet Louise Yellen is an American economist and educator. She is the first woman to lead the U.S. Treasury Department and the Federal Reserve. She is the first person in history to head both of those groups and the White House Council of Economic Advisors. Yellen is also the Eugene E. and Catherine M. Trefethen Professor Emeritus at Business Administration at Haas School of Business at the University of California, Berkeley. Former President Barack Obama called Yellen, “one of the nation’s foremost economists and policymakers” who is “renowned for her good judgment” in 2013.
- Janet Louise Yellen is the first woman to serve as the U.S. Treasury secretary.
- Yellen was the first woman to serve as the chair of the Federal Reserve Board.
- She chaired the White House Council of Economic Advisors under former President Bill Clinton.
- As a policy advisor, she is a dove and a Keynesian economist who believes economic markets are flawed requiring governmental regulation.
U.S. Treasury Secretary
President Joe Biden nominated Janet Yellen as the 78th head of the U.S. Treasury and she was confirmed by the Senate as Treasury Secretary on Jan. 26, 2021. “She has spent her career focused on unemployment and the dignity of work,” Biden said, “She understands what it means to people and their communities when they have good, decent jobs.”
On the Federal Reserve Board
Obama nominated Yellen on Oct. 9, 2013, to become the first woman chair of the Federal Reserve Board. Yellen was tasked with keeping the gradual recovery of the economy on track. She succeeded Ben Bernanke and was scheduled to remain a board member until 2024.
In November 2017, former President Donald Trump decided against offering her a second term and nominated Jerome Powell to replace her. Trump called her “a wonderful woman who has done a terrific job,” but her support for financial regulations possibly hurt her chances of securing a second term.
On Nov. 20, 2017, Yellen announced her resignation from the Federal Reserve Board as soon as Jerome Powell was sworn in. She was the first chair in nearly 40 years to not receive a second term.
Before serving as chair, she was the Fed's vice-chair. She was appointed to this role for a four-year term on Oct. 4, 2010, by former President Obama. Yellen used her position to convince the Fed to use a 2% annual target for inflationary growth. The Democrats urged Obama to appoint Yellen as chair over former Secretary of the Treasury Larry Summers due to her “impeccable resume, focus on unemployment and solid record as a bank regulator.”
Background and History
Janet Yellen was born into a middle-class Jewish family in Brooklyn, New York, on Aug. 13, 1946. Her mother, Anna Ruth, was an elementary school teacher and her father Julius was a doctor who treated patients out of the family's brownstone. Janet Yellen eventually became editor of the Fort Hamilton High School newspaper, from which she graduated as valedictorian. She graduated summa cum laude with an economics degree from Brown University in 1967 and went on to receive her Ph.D. from Yale University in 1971.
She then worked as a professor at several prestigious universities, including Harvard and The London School of Economics. In 2004, she became president and chief executive officer (CEO) of the Federal Reserve Bank of San Francisco, where she was credited with foreseeing the subprime mortgage crisis more accurately than her peers.
Yellen was a member of a number of economic committees and councils, including the Organisation for Economic Cooperation and Development (OECD), the U.S. Council of Economic Advisors, and the American Economic Association. She served as a governor for the Federal Reserve Board between 1994 and 1997 and was also an advisor for the U.S. Congressional Budget Office. She was a research associate for the National Institute of Economic Research and was on the board of directors for the Pacific Council on International Policy. She has also held fellowships for the National Association of Business Economics, MIT, and Guggenheim.
While working at the Federal Reserve, she met fellow economist, George Akerlof. Janet and George are now married and have a son, Robert, who is an economics professor.
Janet Yellen's Economic Philosophy
Yellen is a staunch dove. Much of the research she performed as an academic economist focused on employment. She and her husband, George Akerlof, are both Keynesian economists who believe that economic markets are fundamentally flawed and need governmental regulation to function correctly. They both created economic models, such as the efficiency wage theory, showing how firms seeking to maximize profits would pay higher than minimum wages. This model was a rebuttal to conservatives such as Robert Lucas, who mandated that flexible wages and prices would allow the economy to revert to form more easily after market upheavals. These models helped to form the foundation of the New Keynesian philosophy.
She was the first Democrat to chair the Fed in nearly 30 years but stressed the importance of the Fed being independent of political processes and staying nonpartisan. As chair, she sought to emulate the philosophy of James Tobin, an economist who believed that an economy can be rescued from recession through governmental intervention. She backed Bernanke’s bond-buyback program and continued his stimulus campaign. During her term, she also tightened financial and banking regulations to prevent the past from repeating itself.
During the latter part of her term, Yellen advocated for "gradual rate hikes" believing a sharp rise in rates could hit the economy with an "adverse shock." While the Federal Reserve does not directly focus on stock market returns, the S&P 500 returned 46% since she became Fed Chair in 2014, an average of more than 10% per year.
While in the public eye, Yellen followed Bernanke’s cautious approach, using meticulously researched data and a technocratic manner to minimize surprise announcements or other releases that could roil the markets.
She received the Paul H. Douglas Award for Ethics in Government in 2017. During her acceptance speech, she said the public must believe the Fed is acting only in its interest.