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At the height of the financial crisis in 2009, Janet Yellen told her colleagues things were so bad that people were literally breaking into piggy banks to get cash.
The Federal Reserve chair, who headed the central bank's San Francisco district at the time, tried to lighthen the mood a bit at an otherwise grim Federal Open Market Committee meeting in March.
"Another disturbing sign of how tough things are getting is that people appear to be breaking into their piggybanks to make ends meet—the Cash Product Office reports huge increases in the amount of coins being brought into our inventory," she said then to the laughter of her colleagues. "The December inventories of quarters and dollar coins were up more than 50 percent from 2007, and even pennies were up nearly 25 percent."
Yellen's remarks were part of a release Wednesday of transcripts from the 2009 FOMC meetings. The timing was critical as the U.S. economy was mired in recession and trying to find a way out of the financial crisis. March, however, marked a bottom for the stock market, which has rebounded more than 210 percent since then.
Despite her seemingly lighthearted remarks—she earlier joked about her 401(k) plan—Yellen painted a grim picture of what was ahead. Through the year, her downbeat look on the economy contrasted with that of some members who believed that the seeds of a recovery were in place.
Ultimately, the Fed's "Greenbook" projections for employment and gross domestic product would be wrong. The unemployment rate would peak at 10 percent in October but remain at 9 percent or above until September 2011. Gross domestic product declined 2.8 percent for 2009 and has not eclipsed 2.5 percent annualized since.
"Looking ahead, some more-optimistic forecasters have argued that we're likely to see a rapid V-shaped recovery similar to the ones that followed several past severe postwar recessions," she said. "But my fear is that we may not even get a modest U-shaped recovery, much less a V-shaped one."