Suburbanite Charles Evans helped guide the U.S. economy through turbulent times the last 15 years
Charles Evans became president and CEO of the Chicago branch of the Federal Reserve Bank in September 2007, just in time to help the Fed fight through the Great Recession.
He retired a few weeks ago, having done his part to help the U.S. economy weather the recession caused by the COVID-19 pandemic and the surprisingly high COVID-related inflation that the Fed seems to be making headway against.
Evans has earned a break.
"Yeah, it was really a fraught experience from the earliest days," Evans said.
Still, he allows he will miss the work.
"You don't stop being interested in the economy and how it's performing overnight," the Glen Ellyn resident said. "I don't see how you could do that."
But now his time won't be dominated by his role in guiding the U.S. economy. He and wife Ann will do some traveling, and he'll try to find a balance between being involved in economics to some extent and taking some time for himself.
He has some stories to tell.
'An intense time'
Evans was a part of the Chicago Fed even before he became president. He was director of research and senior vice president. He supervised the banks research on monetary policy, banking, financial markets and regional economic conditions, according to the Chicago Fed website. His research was focused on "measuring the effects of monetary policy on U.S. economic activity, inflation and financial market prices."
The policy work as a staffer, he said, was excellent experience for the promotion to come. And the inside knowledge of the Chicago Fed was helpful when he was tabbed to run the 1,600-person operation that includes bank examiners and of course policy analysts.
He remembered the Federal Open Market Committee in June 2005 discussing the possibility of a housing bubble.
"In June of 2005 the committee decided, 'Yeah, we don't know but it isn't necessarily bad,'" he recalled. "A year later people are defaulting on mortgages and subprime. By 2007 many financial institutions had so-called assets on their balance sheet which didn't have the values that they had written down and they were starting to show through."
That's when his staff experience paid off. He felt prepared when he had to jump right into a tough time for the economy.
"My first meeting (as Chicago Fed president) was September of 2007 and we cut the funds rate by 50 basis points," he said, "and it was a very long time before I ever saw the funds rate go up."
Rates didn't rise again until 2015, and then not by much compared to the series of rate hikes of 2022.
"It was an intense time," Evans said of his 15-year tenure. "It was a very challenging time, but I had been with the Fed since 1991. My first FOMC meeting I attended was 1995. I'd seen difficult times: irrational exuberance, productivity acceleration, 9/11 and everything that came with those security challenges and what it did to the economy, the dot.com bubble and all of that."
A slow start
Going from the COVID recession to the COVID inflation, Evans admitted the Fed reacted slowly. Fed governors did not expect the early burst of inflation to last as long as it has. The jump in prices -- specifically the 40% spike in used-car prices -- was "really extraordinary."
If he could, he'd love to add to the supply of semiconductors, especially for cars.
And then there's the labor shortage. The human factor is something Evans said he thought long and hard about in making his decisions.
"COVID really caused a lot of individuals, households to rethink their priorities and whether working this hard and this much overtime at this point in their lives -- if they're this close to retirement and whatnot -- if it's really worthwhile," he said. "And child care and elder care, the aging of the population, there are more care needs and we don't have a sensible immigration policy that might make up for the aging of the population."
Evans said the size of the labor force and willingness to work will continue to be a "limiting factor on the U.S. economy until something turns around."
Evans leaves the Chicago Fed in the good hands of new president and CEO Austan Goolsbee, who worked at the University of Chicago and in the Obama administration. COO Ellen Bromagen remains with Evans' strong endorsement as well.
"I feel very good about how I left the bank in terms of the leadership is exceptional," Evans said.
"I think the Fed has been fortunate to have the leadership that we've had, from (Paul) Volcker to (Alan) Greenspan, (Ben) Bernanke, (Janet) Yellen to (current Fed chairman Jerome) Powell," Evans said. "I think they've done a very good job, and I think Jay Powell is the right chair at the moment."
Evans expects the Fed to slow the rate hikes now that there are signs that inflation is easing. The economy also remains strong, with GDP coming in at 2.9% for the fourth quarter of 2022 and 2.1% for the year. It's a good sign the economy might avoid a recession.
Just don't ask Evans to bet on the economy's chances of avoiding a downturn. He'd rather bet on the Bears. And that's if the U.S. Congress doesn't default on its debts. Failure to lift the debt ceiling "would be a horrible mistake," he said.
But despite his 15-year economic roller-coaster ride, Evans is grateful for the chance to be a decision-maker.
"I feel really good about the experience," he said. "It's bittersweet to leave, for sure."