Powell’s Eight-Year Fed Tenure Ends, Strong Jobs and High Inflation: How to Grade This Report Card?

TradingKey - After eight years leading the Federal Reserve, Jerome Powell's tenure as Chair will officially conclude on May 15, and Kevin Warsh, nominated by President Trump, is highly likely to take over following Senate confirmation. As early as last December, Powell publicly expressed his hopes for his departure: "I truly hope to hand over a well-positioned U.S. economy to my successor—one where inflation is controlled and returning to the 2% target, while the labor market remains robust and resilient."

Since taking the helm of the Federal Reserve in 2018, balancing "price stability" and "maximum employment" has always been Powell's core mission. Now that his term is ending, this final report card presents a stark contrast: the average unemployment rate during Powell's tenure was the lowest among the last six chairs, while the average inflation rate ranked the third highest.

Powell's tenure has been marked by a steadfast defense of the Federal Reserve's independence. Facing continuous pressure and legal attacks from the Trump administration, he has repeatedly emphasized that monetary policy should remain free from political interference. Before stepping down, he offered three pieces of advice: stay out of elected politics, remain accountable to Congress to maintain oversight relationships, and respect the independent work of Federal Reserve professionals.

Under the shadow of inflation

Every Federal Reserve chair must lead the central bank in facing the epochal economic challenges of their time, and the greatest test that Jerome Powell could not avoid during his tenure was undoubtedly the outbreak of the COVID-19 pandemic and the ensuing chain of economic shocks.

The pandemic completely rewrote the trajectory of Federal Reserve monetary policy. Prior to 2020, the core anxiety of Fed policymakers was insufficient inflation, as they consistently strove to push inflation toward the 2% annual target. However, as the pandemic paralyzed global supply chains and the U.S. government launched trillions of dollars in fiscal stimulus, inflation surged, forcing the Fed to abruptly pivot and cool the overheating economy through aggressive interest rate hikes.

Data shows that, measured by the PCE price index, average U.S. inflation during Powell's tenure reached 3%, not only exceeding the Fed's 2% target but also surpassing inflation levels under his predecessors, Janet Yellen, Ben Bernanke, and Alan Greenspan. During this period, the Fed's 2021-2022 assessment that inflation was merely "transitory" has since drawn widespread criticism within the industry.

Even into the final year of his tenure, the Fed's path to curbing inflation remained fraught with obstacles. The Trump administration's tariff policies kept inflation stubbornly above the 2% target, while the conflict between the U.S. and Iran further amplified market inflation concerns by driving up energy prices.

Reviewing inflation trends, the U.S. CPI inflation rate was only about 1% at the end of 2020, but it surged to a peak of 9.1% by June 2022; while inflation briefly retreated to near the 2% level in early 2026, it ticked up again in March due to the situation in Iran.

Stephen Kates, a financial analyst at Bankrate, noted that the persistently high inflation during Powell's tenure—particularly the rapid surge in 2022—was primarily driven by "strong consumer demand coupled with ultra-loose monetary and fiscal policies."

He also mentioned, "In hindsight, the Fed was indeed slow to react to inflation initially, but it is undeniable that once the tightening cycle began, it adopted one of the most aggressive paces of interest rate hikes in history."

Beyond demand-side stimulus, supply-side disruptions also exacerbated inflationary pressures. Jason Draho, Head of Asset Allocation for the Americas at UBS Global Wealth Management, believes that pandemic-induced supply chain disruptions and imbalances were significant factors pushing up inflation, while the Russia-Ukraine conflict further drove up oil prices, compounding inflationary pressures.

The core PCE price index, a key metric for the Fed that excludes volatile food and energy prices, climbed from 1.6% in February 2018 to approximately 3% in February 2026, remaining consistently above the 2% policy target.

Draho stated, "A variety of inflation shocks have emerged over the past two years. Events such as tariff policies and the situation in Iran have interfered with the Fed's efforts to combat inflation, significantly increasing the difficulty of policymaking. However, the overall trend still suggests that inflation will eventually subside, as these sudden shocks are largely one-off events."

The unemployment rate remained low overall, with a sharp spike during the pandemic.

During Jerome Powell's first two years at the helm of the Federal Reserve, the U.S. unemployment rate remained consistently low. However, the outbreak of the COVID-19 pandemic in April 2020 shattered this stability, as business closures, mass layoffs, and a wave of furloughs pushed the unemployment rate to 14.8%—the highest level recorded since data began in 1948.

Since then, the U.S. unemployment rate has gradually declined, hovering around 4% in recent years. While this figure remains historically low, it still trails the levels seen early in Powell's tenure. Meanwhile, the U.S. labor force participation rate has continued to trend downward; as of March this year, after stripping out temporary pandemic-related factors, it reached its lowest point since the 1970s.

Throughout Powell's term, the U.S. labor market has faced a series of challenges, including the shock of the pandemic, slowing immigration, and the high-interest-rate environment implemented to curb inflation—all of which have created headwinds for employment recovery.

In terms of recovery speed, it took the U.S. only about two years to return to pre-pandemic employment levels following the historic collapse in headcount—a recovery three times faster than the six-year period required after the 2008 financial crisis.

Following the pandemic, the U.S. experienced the "Great Resignation," a period of labor market tightness where workers voluntarily quit in droves to seek better opportunities. Today, however, that trend has clearly subsided, replaced by a market characterized by sluggish hiring demand, decreased employer appetite for labor, and a consistently low quit rate among employees.