SUMMARY

  • National Treasure
  • The Two Faces of the U.S. Consumer
  • Trade Deals Are Not Dead

Many Americans know who the first secretary of the U.S. Treasury was. Alexander Hamilton’s picture has adorned the 10 dollar bill since 1928, and his life and work were recently celebrated in an award-winning musical bearing his name.

But most Americans would be hard-pressed to name even one of Hamilton’s successors. The Treasury secretary does not have the visibility of some other cabinet officers, as the department’s workings are sometimes more operational than strategic. (Pressed to name a Treasury function, most would first identify printing money.)

Janet Yellen, whom President-elect Joe Biden has nominated to become the next Secretary of the Treasury, may rise above the relative anonymity of her predecessors. Not just because she would be the first woman to serve in the role (although that is a notable milestone) or a former Fed Chair. The policies she sets will raise the profile of the department and have an important bearing on our country and on the financial markets.

There aren’t many people anywhere with Janet Yellen’s experience. She served in senior positions within the Federal Reserve for seventeen years, and as Chair of the White House Council of Economic Advisers in the Clinton Administration. She has been a leader within the economics profession for five decades.

Nonetheless, the Treasury job will test her experience and her leadership. The department employs more than 87,000 people, and has an annual budget of $20 billion. Assuming she is confirmed, a range of pressing challenges awaits her. Among them:

  • Avoiding an economic slowdown. Recent news on vaccine development is exciting, but as we discussed last month, it will be a long journey from the laboratory to broad immunity. Recent readings from the labor market show diminished job creation and increased reliance on unemployment benefits (some of which will expire at the end of the year). The next six months could prove challenging for the economy overall and for many American families.

Weekly Economic Commentary - Chart 1 - 12/04/20

When Janet Yellen was on the Federal Reserve Board, she focused quite a bit on the goal of maximum employment. She will now be in a position to serve as a bridge between Congress and the White House as fiscal discussions progress, and will likely press the case for measures that speed the return to employment for those who have been displaced.