White House officials are quietly preparing for the potential departure of Treasury Secretary Janet Yellen after this November’s midterm elections, Axios reported, citing unidentified people familiar with the matter.
The news outlet noted that it would be “the first and most consequential exit in what could be a broad reorganization of President [Joe] Biden’s economic team.”
“While her potential departure would give Biden an opportunity to respond to public concern over his handling of the economy, it would also create an immediate political headache: finding a successor who can be confirmed by the Senate,” Axios continued, adding that a final decision on Yellen, or any other Cabinet replacement, has not yet been made.
Axios’ sources also pointed out that the outcome of the midterm elections, including who controls the Senate, will certainly factor into whether Yellen stays in her current position.
With inflation readings still sitting above 8 percent year-over-year and the Federal Reserve likely continuing its hawkish stance on interest rate hikes, most Republicans have been quick to place blame on Biden and his economic team for the current state of the economy.
Yellen, however, has pushed back on those criticisms on multiple occasions, though she did publicly admit this past summer that she was wrong on inflation. Late last week, during a conference sponsored by the Atlantic, the former Fed chairwoman doubled down on her claim that current red-hot inflationary pressures will retreat “certainly next year,” although there are risks to that outlook including the ongoing war in Ukraine.
“I believe [inflation] is going to come down certainly next year, although, let’s be clear, there are risks,” Yellen said, per MarketWatch.
“The Russian invasion of Ukraine hasn’t come to an end; we’re seeing Putin weaponize oil and gas in fighting this war, so we remain vulnerable to supply shocks. But I think the [Federal Reserve] is clearly committed to bringing inflation down, and I expect that to be successful,” she added.
Yellen has also continued to assert that the U.S. economy is not in a recession despite the Commerce Department reporting that the GDP contracted for a second quarter in a row. She noted during a press conference in late July that most economists define a true recession as involving a “broad-based weakening of the economy,” including substantial job losses, business closures, and a decline in private sector activities.
But “that is not what we’re seeing right now. When you look at the economy, job creation is continuing, household finances remain strong, consumers are spending, and businesses are growing,” Yellen continued, per Fox Business.
“This is a very unusual situation where we have a slowdown, but the labor market remains very tight. We could see some mild easing of pressures in the labor market yet continue to feel we've got a good strong labor market that's operating in full employment,” she concluded.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.