Insight: Covering Coach Yellen and the game of economics

Not many people would compare Federal Reserve Board chair Janet Yellen to New York Giants coach Tom Coughlin, but for Wall Street Journal chief economics correspondent Jon Hilsenrath that’s exactly what she is.

And as the Federal Open Market Committee goes into the second day of its October meeting, Yellen and her team are gearing up for another round of debate about the country’s rebounding economy.

“In the same way, the New York Giants reporter covers the game on Sunday and says what happened in the game,” Hilsenrath said. “A beat reporter doesn’t want to just report the score, he wants to cover how the offense is shaping up, what the coaches are doing. A Fed reporter has to do the same thing. I spend a lot of my time not covering the events, but rather what’s happening leading up to it.”

Hilsenrath said in order to fully understand the Federal Reserve and the way it can impact the economy, a reporter must understand those shaping its decisions.

“A football team has an offense and defense, coordinators and coaches, and you have to know who those people are,” Hilsenrath said. “So a very important part of what I do is ask myself who are the people here that are shaping the decisions that the Fed ends up making about interest rates and bank regulation.”

Bloomberg economics reporter Steve Matthews (right) echoed Hilsenrath’s emphasis on the Fed’s players.

“There was a recent poll that found that a majority of Americans didn’t know that Janet Yellen was Fed chair,” Matthews said. “People obviously should know that. But beyond that, they should realize it’s not a one-man or one-woman show.”

“Decisions are made by a group that includes Fed governors and rotating voting by 11 Fed bank presidents, with the New York Fed president getting a permanent vote.”

For their jobs Hilsenrath and Matthews acknowledge that traveling nationwide to meet with various players is a must, but covering a group that meets occasionally and releases little information can be a difficult task.

In terms of day-to-day writing, Hilsenrath and Matthews approach their coverage fairly similarly in that they both spend the majority of their time gathering extensive background on the Fed and its impending actions.

“One of the big things I did when I first took this job was look at the Fed policy minutes, which they put out at the end of every Fed meeting, and say who’s in the room and try to figure out who those people are then find them, get to know and figure out what they’re thinking,” Hilsenrath said. “Then the other part is trying to understand the issues that they are wrestling with.”

Hilsenrath cited the Fed’s current struggle with connecting a decreasing unemployment rate and an unresponsive inflation rate as an area of research he is particularly interested in currently.

“So I’m trying to dive in and understand that research,” Hilsenrath said. “My goal is to help the Wall Street Journal’s readers think they are in the room and give our readers the opportunity to think about whether the Fed is making good decisions or bad decisions.”

Matthews said the research process is crucial to covering the Fed because accuracy in his reporting is paramount.

“It’s like any other beat where you need to work to understand the subject, the people, the issues,” Matthews said. “That doesn’t happen overnight. There is probably more of a learning curve in covering the Fed than say corporate news because there is so much jargon to understand. Some basic knowledge of economics helps.”

Matthews, and Hilsenrath, noted that getting caught up in Fed jargon can be a slippery slop for young journalists and to try to avoid it as much as possible.

“I think it’s really important from a journalistic stand point to stay away from the jargon that we are flooded with everyday from these guys on Wall Street,” Hilsenrath said. “Part of my job is to cut through that and kind of explain in terms that people understand what’s happening. What I have found is that when I force myself to do that, it forces me to ask better questions and really get to the core of things.”

Matthews said when covering a Fed announcement, like the release of the Beige Book, the research process plays a large role in his coverage.

“If I am writing about it, I will try to read the previous Beige book, review what economic reports have come out recently, and look for corporate or other examples that say something about the economy or labor market,” Matthews said. “I’ll try to gather a lot of background that I may or may not need in advance because we get the fairly lengthy report under embargo, so I’ll be writing on a tight deadline.”

Alan Murray, (right) now editor of Fortune magazine, covered economics and the Federal Reserve for The Wall Street Journal in the mid-’80s and into the 1990s.

Murray said during the tenure of Paul Volcker and Alan Greenspan, the Fed was not nearly as welcoming to the public and press as it can be today, something he noted as both a benefit and disadvantage to today’s journalists.

“In those early days there was little information available to the public, which gave reporters more of an advantage,” Murray said. “I was having conversations that the public wasn’t seeing. It’s a little less true now because they do the press conferences and the speeches, so anyone can be a Fed watcher. All you need is a computer. That makes it harder on the reporters to have a clear edge.”

Murray said a reporter’s edge now depends on dedication to “being a student of the Fed and Fed policy, while having a clear understanding how the different members of the committee are thinking so that you can make intelligent commentary about it.”

Murray recommended journalists covering the Fed focus on language within the Fed’s statement and speeches because the subtlety in the words can lead to a much larger impact.

Hilsenrath said his best advice for covering the Fed is to always remain open-minded because there is more unknown than known.

“I see journalists and non-journalists that have formed their opinions about very complicated issues, and I think when they do that they put blinders on themselves,” Hilsenrath said.

For his part Matthews stressed knowing the material well enough to accurately report on complicated issues.

“Best advice would be to be very focused on accuracy especially if you are new on the beat and you can misunderstand some of what is being said,” Matthews said. “And pay very, very close attention to honoring embargoes.”

As the FOMC concludes its seventh regularly scheduled meeting of the year, it is clear that Fed reporters are looking just as closely at the players on the field as they are the coaches on the sidelines because both shape the game that is the nation’s economy.