Janet Yellen (With Popped Collar): ‘This Is A Huge, Unprecedented, Devastating Hit’

Janet Yellen showed up on CNBC Monday, appearing via teleconference to weigh in on the state of the economy amid the coronavirus lockdown measures that are set to plunge the US into the worst downturn since the Great Depression.

It was a delightful moment at an otherwise dour time for markets. Rather than simply dial in on the phone, the vaunted former Fed chair dressed as she would for a post-FOMC press conference or a congressional hearing. In fact, she appeared to be wearing the exact same signature blue suit jacket she favored for special occasions – and, yes, the collar was popped.

Although her demeanor was characteristically calming – for those who appreciate her academic tone and schoolmarmish cadence, Yellen is a living, breathing Xanax – she didn’t sugarcoat the situation.

“If we had a timely unemployment statistic, the unemployment rate probably would be up to 12 or 13% at this point and moving higher”, she told Sara Eisen. As for GDP, Yellen said the economy will probably contract “at least 30%”.

“And I’ve seen far higher numbers”, she added.

If you listen to the clip below, what you’ll notice is that despite the severity of the situation she’s describing, and irrespective of how shocking the numbers she tosses out are, you’d be dozing by the 1-minute mark if you were already sleepy when she started talking.

Yellen is, in a word, disarming. And that’s a good thing at times like these.

While I’ve always recognized (and, indeed, at times perpetuated) a narrative that paints Yellen in an unfavorable light to the extent the pursuit of extraordinary accommodation long past its “sell-by” date did irreparable harm in terms of perpetuating inequality, she is a consummate academic, and she admits of nothing in the way of panic.

By contrast – and I think this is a completely fair assessment – Jerome Powell comes across nervous from the time he opens his mouth. He does better in front of Congress, ironically, than he does during press conferences, something I personally attribute to the fact that when you’re speaking to individual people (e.g., lawmakers) one’s stature and track record is emboldening – it’s you versus them, and you’d be hard pressed to find a lawmaker whose CV compares to Powell’s.

But speaking to a room full of inquisitive reporters whose job it is to ask “gotcha” questions while being broadcast live to millions of people on national television, is something of a different animal. Public speaking isn’t something that comes naturally to everyone, and history is replete with examples of highly intelligent, highly successful people who simply cannot brave the podium.

In any event, Yellen’s assessment of the economy was downbeat, to say the least.

“This is a huge, unprecedented, devastating hit, and my hope is that we will get back to business as quickly as possible”, she remarked.

As for whether the eventual recovery will be “V-shaped”, Yellen said “I think it’s possible, but I am worried that the outcome will be worse and it really depends to my mind on just how much damage is done during the time that the economy is shut down in the way it is now”.

“The more damage of that sort is done, the more likely we are to see a ‘U,’ and there are worse letters like ‘L’ and I hope we don’t see something like that”, she added.

Oh, and if you were wondering whether Yellen thinks the Fed should consider buying stocks, she certainly doesn’t rule it out. In fact, she thinks it’s a decent idea for Congress to go ahead and approve it – just in case we need it, of course.

“I frankly don’t think it’s necessary at this point, but longer term it wouldn’t be a bad thing for Congress to reconsider the powers that the Fed has with respect to assets it can own”, Yellen mused.

Do you miss her yet?