Janet Yellen, the outgoing chair of the Federal Reserve, said real estate prices and U.S. stocks are too high, but she did not say that both sectors are in a bubble. In an interview with the show “Sunday Morning,” Yellen said that prices are high, but not too high.
Relative to rents, commercial real estate prices are quite high, and current P/E ratios are closing in on the “high end of historical ranges”, according to Yellen. On Saturday, the one-term Fed chair stepped down from the position after Donald Trump did not offer her another term. Yellen is a Democrat and Trump is a Republican. Jerome Powell, a Fed governor for the past six years, is the new chair of the Federal Reserve.
Yellen told CBS’s “Sunday Morning” that she would continue to serve as Fed chair, but Trump refused to nominate her for the position. Yellen said that she felt a great deal of disappointment, and she also said the working as the Fed chair was the “core of her existence.” Yellen referred to the new Fed chair as a balanced, thoughtful man who understands the importance of public service.
Yellen did point out the U.S. banking system is far more capitalized and resilient after the financial meltdown of 2008. She stated that a deep decline in asset prices today would not hurt the financial system as bad as it did during the mortgage meltdown nearly a decade ago.
Yellen also said that legislators should not “roll back” any bank regulations that were put in place after the financial collapse. Since the meltdown almost a decade ago, the U.S. economy has seen the largest expansion since 1945, which is approaching nine years. Yellen believes that the recovery can continue, and she also thinks there is still room for the current bull market to continue its historic run.