Federal Reserve Chair Janet L. Yellen earned widespread approval for her term at the helm of the U.S. central bank, a singularly powerful job in the global economy.
On her watch, unemployment fell sharply — reaching 4.1 percent in October, the lowest point since 2000, the government reported Friday. Inflation stayed subdued, wages began to rise, and she managed a gradual start to the Fed's unwinding of its $4.5 trillion balance sheet, a tricky task that could have undercut growth if mishandled.
People who don't agree on much else have generally agreed that her record is stellar. Sen. Elizabeth Warren (D-Mass.) this week called her “one of the most successful Fed chairs in history,” while President Trump said that she's done an “excellent” job.
Yet despite all that, Trump announced Thursday he would not name Yellen — the first woman to hold the post — for a second term when her tenure expires at the end of January. That is a break with the tradition — the previous three men to the hold the job were reappointed by presidents of opposing parties. And Trump isn't choosing to replace her with someone with a much different vision, either. He tapped Jerome Powell, a mild-mannered Fed governor with far less experience working on economic issues who is expected to stay the course that Yellen set. Trump rejected others who would have been a break with Yellen's approach.
“This is stunningly unusual,” Peter Conti-Brown, a financial historian who studies the Fed at the University of Pennsylvania's Wharton School.
It also, according to some female economists, sends a message to others who may want to follow in Yellen's footsteps.
“Janet Yellen was known to be the hardest-working person around: She set the bar so high, and as a result of her hard work she was ahead of the curve on so many things,” said Julia Coronado, president of MacroPolicy Perspectives and a former Fed staff member. “Despite that, she’s not getting the job back. What is a young woman economist supposed to make of that? That I can work harder than anybody else and be smarter than people around me and get fired? That’s a tough message.”
The decision — if confirmed, Powell will become chair in February; Yellen has the option to stay on as a governor — comes amid growing concern about the low numbers of women in economics and the challenges they face in moving ahead in the field. Only 13 percent of full professors in PhD-granting economics departments are women. Male economics majors outnumber their female peers by nearly 3 to 1.
“You have an example of this incredibly, superlatively qualified woman getting replaced by Yellen lite,” said Heidi Hartmann, an economist and president of the Institute for Women's Policy Research, referring to Powell's support of Yellen's interest-rate decisions. “It's not a good message if you’re trying to diversify leadership and integrate dug-in professions where men are very protective of their turf.”
Even just getting started in the profession can take determination. To measure sexist attitudes in the field, Alice Wu, then a student at the University of California at Berkeley, mined more than a million posts on an online message board, Economics Job Market Rumors, to study how economists talk about women in the profession. Among the words most associated with women: “hotter,” “lesbian,” “anal,” “slut,” “hot,” “feminazi,” “marry” and “dated.” The terms for men? “Mathematician,” “pricing,” “adviser,” “motivated,” “Nobel.” The study set off a firestorm, with more than 1,000 economists recently signing a petition asking the American Economic Association to start its own job site.
At least one activist group suggested the decision on Yellen had sexist overtones.
“This unusual and sexist decision should be deeply disturbing to both liberals and conservatives alike, who recognize the unprecedented nature of Yellen’s success and understand the importance of maintaining stability in our banking system,” Shaunna Thomas, co-founder of UltraViolet, a group focused on feminist issues and social media advocacy, said in a statement.
The White House rejected the notion that gender was a factor.
“The mere suggestion is an affront to Chair Yellen,” White House press secretary Sarah Huckabee Sanders said in a statement. “The president chose a highly qualified nominee, and has expressed only the utmost respect for her service.”
Some female economists said that not too much should be read into the decision, pointing out it's not surprising Trump would want to go his own way.
“I think it really reflects how polarized our times are that [Trump] didn’t feel he could appoint someone who had her origins under President Obama,” said Betsey Stevenson, a professor at the University of Michigan who was a member of Obama's Council of Economic Advisers. “This looks to me like trying to thread the needle,” getting a Republican Fed chair who would continue Yellen's monetary policy, she said.
Trump seemed to indicate just that in an interview last week.
“You like to make your own mark,” Trump told Fox Business's Lou Dobbs, “which is one of maybe the things she's got a little against her.” In Thursday's Rose Garden announcement, Trump called Yellen “absolutely a spectacular person” who had “done a terrific job” and said he was naming Powell, a former investment banker, to be chair “because he will provide exactly that type of leadership: He's strong, he's committed, he's smart.” Trump noted his private-sector experience and “real-world perspective.”
Wharton's Conti-Brown said that while Trump's reported preference for officials out of “central casting” shouldn't be discounted, “I think this pick is about continuing the Yellen Fed without Janet Yellen.” Also, Republicans have been longtime critics of Yellen. The “more persuasive” argument, he said, is that “to renominate Janet Yellen would be an admission by the Republicans that they have been loudly and badly wrong about monetary policy.”
Alice Rivlin, who was a vice chair of the Fed Board of Governors during the Clinton administration, said, “I don’t think this decision reflects either on Janet or on her gender,” adding: “Donald Trump likes to do things his own way, and this is a very partisan moment. So I’m not surprised that he wanted to change leadership at the Fed.” Powell is “a very credible candidate,” Rivlin said.
Yellen's tenure was marked not only for her handling of monetary policy and headline economic numbers, economists said, but for her deft leadership of the Fed, helping to bridge the deep and heated divides that sometime exist between members.
“She corralled the cats,” said Diane Swonk, a Chicago-based economist.
Others pointed to Yellen's listening skills and her willingness to speak about monetary policy and macroeconomics in terms of their tangible benefits on workers and communities, a touch that Karen Dynan, a former Treasury Department chief economist, said may have helped draw more women to economics.
“She can be tough, but she is also warm and compassionate and a good listener. And I think this has made her extraordinarily effective,” she said. “The flip side of her being constructive with regard to attracting more women into the field is that it could be discouraging when she is not reappointed after having done a good job.”
Yet Stevenson said she's optimistic that the pioneering role model Yellen has provided for women in the field of economics will outweigh that. While Trump's decision may break from precedent, Stevenson said, it's possible anyone else, of either gender, would have faced a similar fate in the current political environment.
“She deserves to be reappointed,” Stevenson said of Yellen. “But she also deserves to not have her legacy be that she wasn’t reappointed.”