By Bryan Mena, CNN
Washington (CNN) — The sharpest economic decline in American history, the highest inflation in more than 40 years, aggressive political attacks from the White House, and the worst-ever global energy shock.
Those are some of the extraordinary events that unfolded during the eight-year chairmanship of Jerome Powell at the Federal Reserve, an institution tasked with managing the economy to achieve maximum employment and stable prices. Powell’s term ends on Friday, with Kevin Warsh now confirmed by the Senate to take the reins.
The outgoing Fed leader is known for being a steady hand who was collaborative and decisive, some of his former colleagues told CNN. They credited Powell’s leadership for the Fed’s success at handling the numerous economic crises of recent years, making him perhaps the most battle-tested Fed chair in the US central bank’s 113-year history.
“It’s hard to think about another Fed chair who faced such a combination of punches to the US economy,” Patrick Harker, who served as president of the Federal Reserve Bank of Philadelphia from 2015 to 2025 and worked closely with Powell, told CNN.
“You really have to go back to Marriner Eccles for a Fed chair who dealt with anything similar to Jay [Jerome Powell]. He dealt with the Great Depression and the second World War,” he said of Eccles.
Uncharted waters
The Covid-19 pandemic was Powell’s most daunting challenge at the helm of the world’s most powerful central bank, economists and former Fed officials say.
“The pandemic was not anything that the Fed had experienced before,” said Loretta Mester, who served as Cleveland Fed President from 2014 to 2024 and worked with Powell. “It was a health situation that had implications for the economy, fiscal policy and monetary policy.”
The sudden shuttering of businesses in the spring of 2020 triggered record declines in gross domestic product, the broadest measure of economic output; and consumer spending, the lifeblood of the US economy. It also jacked up the unemployment rate to 14.8% in April 2020, the highest rate since the Great Depression.
Financial markets also crashed, marking the quickest descent to bear-market territory in history as panicked investors rushed into cash, in turn sparking a severe credit crunch. Powell quickly convened his central bank colleagues for two rare emergency meetings in March 2020 to slash interest rates to near-zero and inject liquidity into the financial system through a lending program.
Powell described the Fed’s emergency actions as an “unprecedented” effort to “forcefully, proactively, and aggressively” support the economy. The goal, Powell said, was to build a “bridge” to an economic recovery, and those efforts, coupled with the aggressive response from Congress, are widely credited with blunting the pandemic’s initial blow to the US economy.
“The (Fed’s) Covid response was successful at restoring market stability and preserving access to credit,” Erin Lockwood, a political science professor at the University of California, Irvine, and Fed resident at the Roosevelt Institute, wrote in a statement.
What the critics say
But the economy’s roaring comeback from the pandemic recession didn’t come without a hitch.
In 2021, when businesses scrambled to rehire the workers they laid off in the prior year, they offered higher wages to draw from a pool of workers that had shrunk during the pandemic for various reasons. Not only did American workers have the upper hand in the labor market, they were also flush with savings they had accumulated during the widespread shutdowns and pandemic-era stimulus payments. At the time, supply chains were also still recovering