There is little doubt that Federal Reserve Chair Jerome Powell’s incumbency has been a period of both financial and political turbulence and that the American currency has, in the eight years, lost much of its purchasing power.
Indeed, between allegations of rampant money printing, comments hinting that the U.S. might have adopted the modern monetary theory (MMT), and sticky inflation, the nation’s top banker has become a contentious figure.
Examining the effect Chair Powell’s leadership of the Fed has had on Americans’ savings, it is easy to see why observers and stakeholders are both glad and nervous on May 15: his last day in office.
Specifically, Jerome Powell took his position at America’s central bank on February 5, 2018 – mid-way through President Donald Trump’s first term – and remained in office through President Joe Biden’s incumbency, overseeing the U.S. economy through a major pandemic and a series of new wars across the globe.
During his tenure, inflation spiked to 9.1% at one point and, even on his final day as Fed Chair, remains uncomfortably high at 3.8% with the potential to move even higher as the closure of the critical Strait of Hormuz persists.
Thus, $10,000 in savings held in February 2018 would have seen severe loss in value through the period of heightened inflation and would, by April 2026 – Powell’s final full month in office and the most recent month for which data is available at press time – have a purchasing power of $7,476.
Indeed, in eight years, $10,000 in savings would have depreciated as much as 25.24%.
How does Chair Powell’s impact on savings compare to predecessors?
For comparison, during the incumbency of Janet Yellen – Powell’s direct predecessor, who served from February 2014 to February 2018 – $10,000 depreciated 5.71% to a purchasing power of $9,429.
During Ben Bernanke’s term – which started in February 2006 under President Bush and ended in January 2014 under President Obama – the power of $10,000 fell 15.06% to $8,494.
Chair Powell oversaw a record stock market rally
Elsewhere, while Jerome Powell’s impact on the U.S. stock market is also a topic of exceptional controversy, especially amidst widespread accusations that his approach did much to benefit the extremely wealthy at the expense of regular Americans, it is undeniable that he oversaw remarkable equity gains.
Specifically, the S&P 500 rallied 186.35% during his incumbency, meaning a $10,000 2018 investment would have appreciated to $28,635. Under Yellen, the benchmark index rose 43%, creating the potential for $10,000 in stocks to turn into $14,300.
Lastly, under Chair Ben Bernanke, the investment would have risen 41% despite the Great Recession starting shortly after he took over, potentially turning $10,000 into $14,100.
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