Dennis Lockhart, the president of the Federal Reserve Bank in Atlanta, has worked with both economists. Here are five questions we asked Lockhart about Bernanke, Yellen and the economy:
Q: How do you think Bernanke did as chairman?
A: I’m a big fan of Chairman Bernanke. You can criticize certain moves, but if you step back and look at the big picture, the response to the unanticipated crisis in 2007, 2008 and see where we are today, you have to give him high marks for his leadership. He is one of the people in the country that made an enormous difference in avoiding something that could have been considerably worse. He put us on a road to recovery that is still taking shape. I think history will treat him extremely well.
Q: What are your thoughts of having one of the most learned scholars of the Great Depression in a position to act to prevent it from happening again?
A: He sometimes describes himself as an economic historian, even though from a technical point of view, he’s a first-class, real-time economist. We were lucky as a country that a person in his position had a deep sense of history, particularly the Depression era and the causes and the mistakes that were made in monetary policy. Some other person, without that perspective, without that knowledge, might not have responded in the same way.
Q: Will Yellen need to continue the out-of-the-box thinking, innovative policymaking?
A: It is not as if she’s challenged immediately to come up with new ideas. It is more of continuing a pattern that has been put in place already.
Q: What is your sense on how Yellen will do as chairwoman?
A: I think she’s going to do very well. She’s a first-class economist. She’s been part of all the key decisions for the last several years, deeply steeped in monetary policy and the workings of the Fed. By virtue of having been the San Francisco Federal Reserve Bank president, she knows all about supervision and regulation and the payment system. From a temperament point of view, she’s very much like Ben Bernanke: calm and deliberate.
Q: What are the next hurdles and the Fed’s role in the economy?
A: We need to sustain the pickup in growth that we saw in the second half of 2013. My outlook is that we will sustain that through 2014, 2015. That should help a lot in terms of employment. I am one that thinks the unemployment rate may overstate the overall health … we need to keep policy accommodative long enough to see broad-based improvement in the employment markets.
It sometimes runs up against public perception, but inflation is running too low. We need to see a higher rate of inflation, closer to 2 percent. Depending on how you measure it, we’re at 1 percent. That higher rate of inflation should be felt in people’s incomes, wages.