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Yellen Says Prices `High’ for Stocks, Commercial Real Estate

Outgoing Federal Reserve Chair Janet Yellen said U.S. inventories and commercial real estate costs are elevated but stopped short of saying those markets are in a bubble.

” Well, I don’t want to say too high. But I do want to say high ,” Yellen said on CBS’s” Sunday Morning” in an interview recorded Friday as she prepared to leave the central bank.” Price-earnings ratios are near the high end of their historical scopes .”

Commercial real estate prices are now” quite high relative to rents ,” Yellen said.” Now, is that a bubble or is it too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high .”

Yellen, 71, stepped down as Fed chief on Saturday after one term, after President Donald Trump choose to replace her with Republican Jerome Powell, who’s been a Fed governor since 2012.

” I made it clear that I would be willing to serve, so yes, I do feel a sense of letdown” about not being renominated, Yellen said. The only woman to serve as the head of the U.S. central bank described her work at the Fed as” the core of my existence .” Yellen said she’s supportive of former investment banker Powell, 64, whom she termed” thoughtful, balanced, and dedicated to public service .”

Greater Resilience

The fiscal system is now” much better capitalized” and the banking system” more resilient” than the latter are entering the global financial crisis a decade ago, Yellen said.

” What we look at is, if inventory prices or asset prices more generally were to fall, what would that means for the economy as a whole ?” Yellen said.” And I belief our overall opinion is that, if there were to be a decline in asset valuations, it would not damage unduly the heart of our financial system .”

Yellen’s final act at the Fed was to hit one of the most significant U.S. banks, Wells Fargo& Co ., with an unusual prohibit on growing that follows the San Francisco-based lender’s pattern of consumer abuses and compliance lapses.

In the interview that aired Sunday, she warned that it would be a” grave mistake” to roll back the rules and put one across banks after the previous economic collapse.

The current U.S. economic expansion is now approaching nine years and is the third longest in duration since 1945, according to the National Bureau of Economic Research. Yellen said the economy can continue to grow.” Yes, it can keep going ,” she said.” Recovery don’t die of old age .”

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