Economists Expect Biden to Reappoint Jerome Powell—Will It Stick?

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Nov. 17 2021, Updated 9:33 a.m. ET

Americans' personal bearer of bad inflation news, Jerome Powell's first four-year term as chair of the Federal Reserve has been wrought with economic potholes. His term is set to expire in Feb. 2022. People across the U.S. wonder if President Biden will replace Powell, and Biden says the final decision on Powell's tenure is just days way.

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Expert economists think that Biden will reappoint Powell, but will the reality align with expectations as consumers' worries over rising inflation continue to mount?

Jerome Powell was instated as Fed chair under Trump.

Former President Trump swore in Jerome Powell as Fed chair in 2018. Powell is a lifelong Republican, so the move wasn't a surprise.

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In 2021, Democrats have control of the White House and Congress, which expands the potential outcomes for the next Fed chair term outside of the Republican scope.

Former Fed chair Janet Yellen served under the Obama administration. Shortly after Biden's inauguration, he appointed Yellen as Secretary of the Treasury. Yellen is a Democrat, and this carryover from Biden's vice presidency wasn't a shock to the status quo.

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Jerome Powell's term as Fed chair ends next year

Fed chair terms last four years. Powell's term is set to end in 2022, which means Biden has just a few months to make a decision on whether to replace or reappoint him.

President Biden is close to a final decision

When asked about whether he's any closer to a decision on the Powell reappointment issue, Biden responded, "Yes, as my grandfather would say, with the grace of God and the goodwill of the neighbors, you're gonna hear that in about four days." This was on Tuesday, Nov. 16, meaning the decision is likely to publicize over the weekend if all goes according to Biden's plan.

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Economists expect a reappointment for the current Fed chair.

Following a poll of 40 economists, 96 percent said that they don't think Biden will replace Powell as Fed chair. They think that Biden will reappoint him.

U.S. macro-economist Jim O'Sullivan told reporters the reason for the sweeping consensus is that "if you're seen as doing a decent job for continuity then the president kind of re-appoints, even if it was a president of a different party that appointed him in the first place."

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Powell navigated the muddy waters of the COVID-19 pandemic and Trump's presidency simultaneously. He arguably contributed to the fact that the 2020 recession lasted just two months—the shortest recession in U.S. history.

Keep in mind that this poll, made up of economists, isn't the be-all-end-all for Biden's Fed chair decision. The position could just as easily go to Lael Brainard, the former Under Secretary of the U.S. Treasury for International Affairs, PhD economist, and a Democrat. While some people say that political parties don't make a difference in Fed chair decisions, Biden has proven his intent to differentiate himself from Trump at expansive costs.

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Last week, a White House official said Biden is still weighing his options between Powell and Brainard.

Will the Biden administration renominate Jay Powell?

Biden's decision on whether or not to replace Powell will become clearer over the next few days.

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Following the decision, Biden will also have to determine whether to reappoint Vice President for Supervision Randal Quarles before his term ends in 2022. There's also Richard Clarida, whose term as a board member is ending. Biden will likely fill his role as well as the currently vacant spot left empty under the Trump administration.

Ultimately, the Fed has the potential to go through a real shift next year, whether or not Biden replaces Powell. With interest rates up 6.2 percent over the last year (according to the Bureau of Labor Statistic's October data), tapering of bond purchasing, and supply chain issues causing economic disruption, the Fed Chair has a big job ahead.

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