On February 3rd, Janet Yellen concluded her four-year tenure as Chairwoman of the Federal Reserve. On the eve of her handing over the reins to newly confirmed Chairman Jerome Powell, Vice News Tonight ran a segment lauding Yellen as “one of the most effective” Fed chairs in history. The story featured an oft-cited quote by the Mercatus Center’s Scott Sumner praising Yellen’s performance: “Yellen is on a glide path to near perfection.”

Yellen’s success is hard to dispute using the Fed’s own criteria: its dual mandate. The Fed’s dual mandate gives it two main policy objectives: maintaining full employment and achieving low and stable rates of inflation. In her four years at the helm, unemployment fell from 6.7 percent to 4.1 percent — slightly lower than most estimates of full employment. Inflation consistently hovered just below the Fed’s 2 percent target. With these results, it is no surprise that President Trump’s decision not to reappoint Yellen has been met by many Beltway pundits as a “tragedy.”

Yellen has certainly accomplished hitting the Fed’s goals during her brief tenure. But that doesn’t necessarily mean that her tenure will be or should be considered a success.

The Dual Mandate and Normalization

First, let’s return to the Sumner quote that has made the rounds across a variety of news outlets. His full quote reads as follows: “Yellen is on a glide path to perfection, as she will probably end her term achieving the Fed’s dual mandate better than any other chair in history.”

What’s conveniently neglected in these stories is that Sumner also argues the Fed’s dual mandate is, quite frankly, a pretty lousy policy regime. It, therefore, might not be the best standard to judge Fed chairs on. Sumner himself strongly favors a nominal GDP price level targeting regime. By this standard, Yellen’s performance, while admirable, has been far from historic.