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|22 November 2021
||Good Judgment | Better Decisions
Before 6 February 2022, will the president announce Jerome Powell’s nomination for a second term as Chairman of the Board of Governors of the Federal Reserve System?
A: Yes [blue]
B: No, but the president will announce someone else’s nomination to be Chairman [red]
C: No, and the president will not announce anyone’s nomination to be Chairman before 6 February 2022 [gold]
Opened 11 June 2021
Closed 22 November 2021; resolved as “A: Yes”
Jerome Powell took office as Chairman of the Board of Governors of the Federal Reserve System on 5 February 2018 for a four-year term. Powell’s current term expires in early 2022.
Examples of Superforecaster commentary in italics
AT A GLANCE:
16 November 2021 – Jerome Powell’s current term as Chairman of the Board of Governors of the Federal Reserve System expires in early 2022. Good Judgment’s Superforecasters are looking at previous Fed nominations, potential signals from the Biden administration and the Democratic Party, and Powell’s health, as well as the question of inflation to forecast a 95% probability that the president will nominate Powell for a second term before 6 February 2022.
SUPERFORECASTER COMMENTARY HIGHLIGHTS:
16 Nov 21 – Comment: There is some probability that Biden would nominate Brainard even if he knows the confirmation is doubtful because of the political calculus. But others have argued that Powell’s confirmation might be difficult as well.
15 Nov 21 – Comment: A compromise is possible: Brainard could be the next vice chair for supervision (she is seen as strong on regulation, and the position is currently open), or indeed the vice chair if nominated next year. Alternatively, the Democrats might want to save her for the Treasury Secretary position (she was considered for the role back in late 2020), in case Yellen doesn’t complete a full term.
15 Nov 21 – Comment: WSJ journalists (after speaking with “unnamed sources”) seem to suggest that it doesn’t matter whether it is Powell or Brainard as they have had similar views on policy recently. They also note that Brainard’s meeting went “better than expected” and lasted longer than Powell’s. While the Democrats have 51 votes in the Senate, there are ways for the minority to hold up the confirmation process. There are 3 open vacancies and a package deal with Powell, Brainard, and a third appointee might have smoother sailing. Nonetheless, I am starting to think there is an increasing chance for Brainard, Raskin, and Spriggs.
09 Nov 21 – Comment: I suspect the Brainard “interview” is more about signaling that she’s next in line after Powell.
08 Nov 21 – Comment: If Biden were to go for someone (e.g., Brainard) instead of Powell, it would play well for the GOP in next year’s elections and 2024 presidential election. Biden got elected on a “moderate” platform and to remove Powell would signal a major shift to the left.
08 Nov 21 – Comment: If Biden does decide to listen to the progressives in Congress and not reappoint Powell, climate change will be the main reason. It’s possible that this could happen, but my sense of how Biden thinks and makes decisions does not make this the most likely outcome.
06 Nov 21 – Comment: Washington Post reports Powell and Brainard were both at the White House on Thursday. A decision may be coming soon. Powell seems to be the favorite, although deals with progressives for other objectives (infrastructure, etc.) could plausibly affect the outcome.
04 Nov 21 – Axios: “Scoop: Senate senses Powell pick.”
04 Nov 21 – Comment: It will be a market shaking event if a steady communicator of policy and rationale is replaced in the 11th hour. I am assuming Biden’s political calculus will not let this happen.
04 Nov 21 – Comment: Bloomberg survey of economists has 79% probability that Powell serves a 2nd term.
01 Nov 21 – Yellen says she has discussed Fed chair with Biden, praises Powell for doing a ‘good job.’ Comment: Yellen’s support.
28 Oct 21 – Comment: With 2% growth due to lower spending, Biden might want to change horses to see if that provides inspiration. On the other hand, Powell has steered the economy through treacherous waters.
21 Oct 21 – Comment: Biden is fighting on multiple fronts now and given Powell’s broad popularity and generally steady hand over the last couple of years, it would seem to be a mistake to replace him.
20 Oct 21 – Comment: Reuters reports “Powell favored for Fed reinstatement but investors examined alternatives”.
17 Oct 21 – Comment: Losing the clean energy plan from the reconciliation means Biden will face more pressure to tackle climate change by other means. There may be measures the Fed can take to do this, but Powell has been unwilling to go that route. I doubt Biden would replace Powell for that reason, but it’s more than a remote possibility, if only to show progressives that he hasn’t given up.
16 Oct 21 – Comment: Powell’s prospects are “dented but not derailed,” says WSJ article. Still odds on favorite, says FT.
08 Oct 21 – Comment: Progressives need a win. The question is whether Brainard goes to Treasury or the Fed. I don’t see Yellen staying on past the midterms, but if the Democrats lose their majorities, would Brainard really want the Treasury job? Much safer to be at the Fed. Still, Powell seems very likely (Biden has enough other things to worry about). Response: Replacing Powell as Fed chair isn’t the kind of win progressives want. They’re much more focused on the content of the BBB plan.
05 Oct 21 – Comment: Biden aide: The president has confidence in Powell “at this time.” That qualifier should worry Powell.
05 Oct 21 – Barron’s: Powell’s prospects for a second term are increasingly in peril. Comment: Still thinking Powell is the safe choice for avoiding too much turbulence in the market with multiple Federal Reserve Board positions opening up due to expiring terms and latest resignations. Nonetheless, moderating my position some.
02 Oct 21 – Comment: Biden might offer this position up for progressive votes on infrastructure. Backing off some.
02 Oct 21 – Comment: MarketWatch suggests“a Fed facelift is unavoidable.” Predictit has been going down (however I’m not suggesting these are information-rich data). FT says Powell will face a “rockier path” to second term.
28 Sep 21 – Comment: The unexpected departure of two top Fed officials should only add further support for keeping Powell on to maintain stability and confidence. Nonetheless, noting that Elizabeth Warren has very openly voiced her opposition to Powell’s reappointment.
21 Sep 21 – Comment: MarketWatch says analysts “who keep tabs on Washington for Wall Street” are now fairly certain about his renomination.
14 Sep 21 – Dodd and Frank call on Biden to renominate Powell to chair the Fed. Comment: Frank and Dodd are getting behind Powell. Seems more likely Lael Brainard will get the supervision (vice-chair) role and then perhaps ascend to the chair when Powell retires (which could be before his term ends). Still keeping a small chance for Lael Brainard, as progressives may want a win after not likely getting all the spending and tax hikes they wanted in the coming spending bills.
12 Sep 21 – Comment: Biden likes bipartisanship. He will probably offer the progressives the vice-chair position. Progressives might play hardball and trade this position for their infrastructure vote. Leaning toward renomination.
05 Sep 21 – Comment: Progressive pushback will make it more likely Powell gets renominated, not less, allowing Biden to show he is bi-partisan.
01 Sep 21 – Brainard asks that Senators not put her up against Powell.
30 Aug 21 – Comment: There are reports about a compromise–“naming Powell to a second term as Fed chairman and Governor Lael Brainard…as vice chair.”
10 Aug 21 – Comment: Powell has Yellen’s support. Given Yellen’s influence in Democrat politics and among Biden’s advisors, Powell’s renomination seems very likely. On the other hand, the progressives may want someone more outspoken than Powell (e.g., Brainard). Possible scenarios against reappointment would be (1) Powell deciding he doesn’t want to serve another term (no indication of this yet) or (2) a greater need for Biden to placate progressive activists, e.g., if his spending bill gets trimmed back due to dissent from moderates.
25 Jul 21 – Comment: Powell’s reappointment seems solid, barring his getting sick or opting out of a second term.
20 Jul 21 – Comment: There is a possibility of Lael Brainard being nominated for the Fed’s top position, but Jerome Powell is a known quantity, who has successfully steered the country through the pandemic thus far, and he has a good relationship with the Treasury Secretary. One way to re-shape the Board in terms of policy would be through appointing more progressive candidates to the three other Fed openings.
16 Jul 21 – Comment: Reuters suggests Biden will reappoint Powell, according to a poll of economists.
14 Jul 21 – Comment: An op-ed by Robert Kuttner suggests Powell is eager for Biden to reappoint him, but Biden is likely to name a new Fed chair, although the decision hasn’t been made yet. Josh Barro, on the other hand, says appointing a new chair would be “a major mistake.”
13 Jul 21 – Comment: 5.4% inflation in June is much beyond most predictions, though understandable given it is a comparison to a collapsed economy in 2020. Politics though deals with perception. Putting a tad more on the “No” answer choices.
08 Jul 21 – Comment: Fed Chair’s term ends February 2022. A case for putting a couple of points into option C: There is a Board position open and Biden has been slow to fill it. This article also says the Fed Board has operated for 8 years with one missing member. The Fed has to decide on when to taper buying securities and when to raise rates. Getting that wrong could damage the economy and hence Democrats chances in 2022. If Powell gets prediction of inflation wrong or the Fed makes a damaging move, Powell is likely to be out since he was put in the position by Trump. Right now, I see a lot of confidence in Powell, but there are a lot of variables that could upset the apple cart. Variants, supply chains, trade war issues, military actions, unemployment not coming down, runaway house prices and real-estate speculation.
05 Jul 21 – Comment: No smoke signals from the White House that a change is being considered.
03 Jul 21 – Comment: Except for Yellen under the prior president, Fed chairs are always reappointed. That said, if inflation starts spiraling, that could change.
24 Jun 21 – Comment: Health issues are unlikely in the next 226 days, and there’s no other better fitting candidate in sight. I think most Democrats would be satisfied with the gender or racial compromises on the other seats of the Board. And being one of the most powerful people in world economics might be an incentive for Powell to stay.
19 Jun 21 – Comment: Adding the consideration that Powell might opt out for health or family reasons to the odds that he might be replaced.
19 Jun 21 – Comment: Inflation will be Powell’s Achilles’ heel. It is not yet abating much.
18 Jun 21 – Comment: The only potential problem for Powell is inflation. If it is perceived as getting out of hand, he will be gone – blamed for too slow a reaction.
15 Jun 21 – Comment: I don’t think Biden will look further than Powell unless he has to. Given that Google doesn’t turn up any health problems, I guess Powell’s odds of having disqualifying health issues, etc., in the next 6 months at age 68 are more like 1 than 2 percent.
14 Jun 21 – Comment: I’m trying to fast-forward to what it will look like in Jan ’22. A Covid variant will probably be working its way through some segment of the population of the planet (perhaps in the US, too). Likely, that will slow down parts of the global economy (supply chain), but not all of it. Would Biden want to put someone else in place? Would Powell want to retire? In looking at past Fed Chairs, new election (Trump) meant no reappointment of Yellen. Greenspan remained through George H.W. Bush and Clinton. I haven’t seen any trial balloons from the Biden administration about Powell, so I’m more inclined to think that Biden will not nominate someone else.
13 Jun 21 – Comment: Depends on how economy is doing and how much Biden needs the progressives.
11 Jun 21 – Comment: I doubt President Biden would want to rock the boat. He would not want to appoint someone more dovish at that time. Appointing a hawk would not help markets, either. Stability and predictability are what is needed, and so far Jerome Powell has managed both.
Copyright 2021 by Good Judgment Inc. This presentation is solely for informational purposes. The information contained herein are not to be construed as legal, business, investment or tax advice. No representation or warranty (express or implied) is provided with respect to the accuracy, completeness, or reliability of this presentation. The future is inherently uncertain, and investors should exercise prudence and their own judgment in making investment decisions. Neither Good Judgment nor any of its directors, employees, or agents accept any liability for any loss (direct or indirect), including investment loss, or damage arising out of the use of the information herein. Any opinions expressed in this document may change without prior notice.
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