Transcripts show just how scary things were getting for Yellen and the Fed in 2009

March 4, 2015

yellen2009.jpg The U.S. Federal Reserve just released full transcripts of its crisis-fighting meetings of 2009, when the U.S. economy was in the depths of recession and unemployment was soaring to 10 percent. Janet Yellen, who at the time was head of the San Francisco Fed, gave a sense of just how scary things were getting:

“The economic and financial news has been grim,” she told colleagues at a mid-March policy meeting, according to the transcripts. “Things are now so bad that I actually open the Greenbook with greater trepidation than my 401(k).”

The Fed’s so-called Greenbook is its official summary of economic and financial conditions, distributed to all policymakers a week before meetings. With stocks hitting their lowest levels in 12 years that month, one could understand how Yellen, now the Fed Chair, would feel.

After some laughter, she continued:

“The awful employment and spending data have not been much of a surprise, but they do dispel remaining hopes that we might see a turnaround any time soon. This conclusion is reinforced by what I’m hearing from my business contacts. Their already sour mood is taking another sharp turn for the worse. One director reported that businesses were so shaken that it would take a sustained period of positive data, on the order of six to nine months, before they would begin to consider expanding production and employment. Another disturbing sign of how tough things are getting is that people appear to be breaking into their piggybanks to make ends meet…”

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