California fared poorly under Jerome Powell's Fed leadership

Most Californians will recall Jerome Powell’s reign as Federal Reserve chairman as an era when life seemed largely unaffordable.

The end of his term as boss of the nation’s influential central bank prompted my trusty spreadsheet to grade his tenure against four predecessors and the economies of roughly the past half-century.

The report card tracked the national Consumer Price Index and the Fed Funds rate, an interest rate the Fed uses to manage the overall economy. California-wise, grades were based on statewide job creation, total income – a measure of overall wealth growth – and an affordability yardstick – how incomes compared with home price changes, as calculated by a federal index.

Yes, this is relatively simple math for a complex job. And the Fed chairman’s ability to alter the nation’s economy, no less a state’s business climate, is limited by the central bank’s power.

For example, the Fed boss cannot alter legislative or regulatory tweaks that run counter to the central bank’s wishes.

Plus, outside forces make the Fed’s job even rougher. Powell had to deal with, among other items, business shutdowns during a pandemic, the Trump administration’s unorthodox economic policies, and lately, the war in Iran.

However, when you get to sit in the big chair, right or wrong, economic progress is put on your shoulders.

And according to my scorecard, which averaged grades across five economic yardsticks, Powell’s eight years at the helm earned the second-worst California-centric score compared with the previous four central bank leaders.

Grading Powell

Let’s look inside Powell’s report card, noting that for this scorecard, his final numbers were from 2025’s fourth quarter, the latest comparable figures available.

First, ponder the two national benchmarks in the grade: the nationwide cost of goods and the Fed’s key tool, the Fed Funds rate. Most folks want low inflation and interest rates.

The inflation rate as measured by the CPI at the end of 2025 was 2.8%, 20% below the 3.5% average during Powell’s tenure. That drop ranks third best among five Fed bosses.

As for interest rates, the year-end 3.9% Fed Funds rate was 50% above his average of 2.6%. That’s second-worst among his peers.

Now, let’s consider Powell’s impact in California.

Jobs statewide grew by 0.3% annually, the second-worst rate. Meanwhile, income rose at 6.4% a year, the second-best gain.

Then there’s our “affordability” grade. That income growth trailed 8.2% annual home price gains – the worst gap among the last five Fed chairs.

Add it all up, and Powell was graded No. 4 out of five.

History reminds us how tough the Fed chairmanship is. Here is how the four other central bank bosses ranked, from worst to best.

No. 5 Janet Yellen

Janet Yellen’s 2014-18 term was during the lethargic recovery from the Great Recession.

The 2.2% inflation rate as her tenure ended was 68% higher than her 1.3% average, the biggest jump of the five.

Rates rose, too. The 1.5% Fed Funds rate when she left the chairmanship was triple her 0.5% average. Again, worst of five.

California’s economy did recover, but inconsistently.

Yellen’s term saw 1.9% employment growth (No. 2) but only 5.5% income growth (No. 4). When incomes are compared with 5.4% home price gains, Yellen oversaw the second-smallest affordability gain.

No. 3 Alan Greenspan

During Alan Greenspan’s 18.5-year tenure - 1987 through 2006 - he gained a “maestro” reputation for guiding the economy through twists such as stock market crashes and the 9/11 terror attacks.

But his reputation was tarnished when he exited the chair just before the Great Recession pummeled the global economy.

His 3.7% term-ending inflation rate was 20% above his 3.1% average, the second-worst performance. His final Fed Funds rate of 4.5%, vs. an average of 4.8%, was a 7% drop, ranking No. 3.

In California, Greenspan got No. 3 rankings for 1.3% yearly employment additions, 6% annual income growth and affordability as incomes were modestly above 5.3% yearly home price gains.

No. 2 Ben Bernanke

Ben Bernanke’s eight-year reign – 2006-14 – was essentially about keeping the economy afloat during a global financial crisis and its fallout.

His grade reflects how a dramatic economic meltdown can improve affordability – and its cost.

Bernanke’s final inflation rate of 1.4% was 34% below his 2.2% average, the biggest improvement. The worldwide business collapse cut consumers’ willingness to pay more for anything.

That debacle required his 0.1% final Fed Funds rate – yes, basically zero – to prop up the ailing economy. That was 95% below his 1.4% average rate, also the biggest drop.

Meanwhile, California’s business climate stunk.

The recession’s cost? Under Benanke, there was 0.2% annual employment growth and a 3.3% annual increase in income. These were the worst results of the five Fed chairs.

Yet Bernanke’s affordability score was best, as income growth contrasted with an average 1.3% annual home depreciation.

No. 1 Paul Volcker

The financial medicine of Paul Volcker’s eight-plus years in the chair – 1979 to 1987 – was unpopular. But his chairmanship’s suffocating high interest rates created a palatable cure.

Volcker’s 4.2% end inflation rate seems lofty today, but it was 32% below his 6.1% average, the second-best improvement.

Ponder his 6.8% final Fed Funds rate. Again, that’s sky high, but it was 35% below his 10.6% average, the second-largest drop.

And many folks forget that Volcker served when California’s economy was booming.

His tenure saw the best statewide annual employment growth (2.9%) and income growth (9.2%). And there was the second-best affordability gain, as incomes easily outpaced 5.3% annual home appreciation.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

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This story was originally published May 15, 2026 at 6:37 AM.