The return of Janet Yellen

“Given a fair shot and equal chance, there’s nothing beyond the capacity of the American people,” said US president-elect, Joe Biden, when introducing his new economic team. Janet Yellen personifies that vision, says The Wall Street Journal. Having made history in 2014 when she became the first woman to lead the US Federal Reserve, she has now smashed two more glass ceilings – becoming not just the first female US Treasury secretary, but also the first person to achieve the holy trinity of heading the Treasury, the central bank and the White House Council of Economic Advisers.

The human touch

The 74-year-old economist has pledged to run “an institution that wakes up every morning” thinking about people’s jobs, paycheques, struggles, hopes and dignity, says The New York Times. “A famed labour economist”, Yellen observed that growing up in “working-class Brooklyn” had shaped her. Her mother, Anna, was a junior school teacher; her father, Julius, was a family doctor in a neighbourhood of poor European immigrants. “I heard very often when I was growing up what it meant to family life when someone lost a job.”

Fans credit Yellen with broad-mindedness, arguing she brings “a human touch” to decisions. “She understands the economics, she understands the politics, she has empathy and a deep understanding of social problems,” says former European Central Bank president Mario Draghi. “It’s very, very, rare to find that combination.” But it was her “brainy side” that shone early on, says the Financial Times. Top of her class, Yellen edited her high school newspaper – in one edition conducting “a witty interview with herself”. At Brown University, she fell in “love at first sight” with economics, later studying for a doctorate under James Tobin, “a master of Keynesianism”, at Yale.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Ditching academia for her first job on the Fed staff in 1977, Yellen met her husband, economist and later Nobel laureate, George Akerlof, in the cafeteria. “Not only did our personalities mesh perfectly, but we have always been in all but perfect agreement about macroeconomics,” he once wrote. Early in their marriage, the couple both taught at the London School of Economics before returning to San Francisco in the early 1980s. “I think at the time people underrated her,” LSE professor Lord Desai told the BBC in 2014. “She was ‘just’ George Akerlof’s wife.”

A safe pair of hands

Yellen finally shrugged off the “trailing spouse” moniker in 1994 when she joined the Fed’s board of governors, three years later becoming chair of Bill Clinton’s Council of Economic Advisers. Credited with delivering “early warnings about the credit crunch”, she took the top Fed job in 2014 under Barack Obama, says The Economist. Her subsequent rejection by Donald Trump (who reportedly questioned whether 5ft 3in Yellen was “too short” for the job) was at odds with her performance – “the Yellen Fed found a decent balance”.

Often described as unflappable, she has long been seen as a safe pair of hands. Yet Yellen has also “quietly achieved rock star status” among a younger generation far removed from economic and political circles, says The New York Times. In 2014, she was “mocked” for wearing the same outfit to both her White House nomination and her confirmation hearing. “At least we know her mind won’t be preoccupied with haute couture,” wrote one waspish gossip columnist. Suffice to say, no one disses Janet Yellen like that anymore.