Jun 20, 2019

Jerome Powell's Fed statements aren't dumbing things down

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Reproduced from Deutsche Bank; Chart: Axios Visuals

Fed Chair Jerome Powell has made FOMC statements shorter and spoken more often, but he hasn't actually spoken more plainly — at least not when compared to predecessors Ben Bernanke and Alan Greenspan.

Be smart: A 2014 report from the St. Louis Fed found that what increased the complexity of the reports was the Fed's quantitative easing program.

  • "During Federal Reserve Chair Alan Greenspan’s tenure ... FOMC statements averaged 210 words with a reading grade level of 14. The statements continued on this track with Chair Bernanke from March 2006 until the end of 2008, when they started to change dramatically with the onset of the financial crisis and the beginning of so-called unconventional monetary policy.
  • "By January 2009, the statements were over 400 words with reading grade levels around 16.
  • "Under Chair Yellen, the FOMC issued five statements from March to September 2014. All five exceeded 800 words and had reading grade levels of 18 or 19, suggesting that readers would require an education level of about three years beyond a four-year college degree to understand them."

About the Flesch-Kincaid index: St. Louis Fed researchers explain, it "combines two measures of text complexity — average word length and average sentence length — to generate a reading level that corresponds to a U.S. grade level or the number of years of education generally required to understand the text."

Go deeper: The Fed's newly unified voice

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  5. Public health latest: Anthony Fauci called for all states across the U.S. to issue stay-at-home orders. The FDA will allow blood donations from gay men after 3-month waiting period, citing "urgent need."
  6. Business latest: Treasury Secretary Steven Mnuchin said oil companies are eligible for aid from new lending programs the Federal Reserve is setting up, but not direct loans from his department.
  7. U.S.S. Theodore Roosevelt: Navy removes captain of aircraft carrier who sounded alarm about coronavirus.
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Photos: Alyssa Farah, Defense Department; Stephanie Grisham, Alex Wong/Getty Images; Kayleigh McEnany, Scott W. Grau/Icon Sportswire via Getty Images

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