Expect Drama In December

Uncertainties regarding a new Fed chair, the debt ceiling, budget, and tax reform make it unlikely there will be a carefree Christmas.

Stanley Fischer submitted his resignation as vice chairman of the Federal Reserve on Wednesday. Fischer was expected to leave when his term expires in June 2018, and his move this week was a surprise in timing.

This now leaves President Trump with four vacancies to fill on the board of governors. The fifth position, that of chairman, is the one that matters most. And there’s a plot twist.

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Trump was apparently not happy with Steve Cohn’s reaction to the president’s Charlottesville comments and has dropped Cohn from consideration. This leaves Janet Yellen as the front-runner. Rumor has it Trump is searching for an acceptable replacement for Yellen, and it’s not clear that Yellen wants to stay. The replacement drama might not end until December unless Yellen ends it early.

With the Fed chair, the debt ceiling, budget, and tax reform now looking to pile up in December, having a carefree Christmas isn’t looking too good.

Dwight Johnston is the chief economist of the California and Nevada Credit Union Leagues and president of Dwight Johnston Economics. He is the author of a popular commentary site and is a frequent speaker at credit union board planning sessions and industry conferences.

September 7, 2017

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