Roger Ferguson sees a bright light ahead for investors, but only at the end of a dark tunnel.
Ferguson, 69, is president and chief executive officer of TIAA. He is the former vice chairman of the Board of Governors of the U.S. Federal Reserve System. He also represented the Federal Reserve on several international policy groups and served on key Federal Reserve System committees.
He recently announced that he intends to retire in March 2021 from TIAA after 12 years with the financial firm.
The Biden administration is now reportedly considering him for a top economic position.
One of the most well-known Black executives in the financial industry, Ferguson has been talking of late about how capitalism in the U.S. needs to be more inclusive and the dangers of Congress failing to produce another stimulus package.
If Ferguson is brought on to the Biden administration, he'd be in charge of economic policy during a crisis that rivals the Great Depression. Unemployment claims this week were at their highest level in months.
In a recent Q&A with CNBC, Ferguson discussed the reasons for his optimism despite the dark year that was 2020. He also spoke about how the crisis has disproportionally hurt people of color as well as those hoping to retire comfortably. The interview has been condensed and edited for clarity.
CNBC: What do you believe the next stimulus package must contain to help the millions of Americans struggling right now?
Roger Ferguson: Congress moved aggressively on the first round of stimulus earlier this year. Had the Fed not moved aggressively, things most likely would have been much worse. To help avoid another economic downturn, Congress should continue to negotiate a new package to extend unemployment benefits while providing direct support and assistance to individuals, states and local governments. Such support would help address the inequities that the pandemic has exacerbated for vulnerable communities.
CNBC: The stock market was super unpredictable in 2020. Even with the country in the worst public health crisis in a century and unemployment at record levels, many people saw their 401(k)s climb. Why this disconnect between Wall Street and Main Street?
RF: Millions of people globally are still struggling with the ongoing human and economic tragedy surrounding the pandemic, and we must acknowledge that first. At the same time, a combination of aggressive U.S. fiscal and monetary policy, optimism about vaccines and the consistent performance of some sectors, notably global manufacturing and U.S. housing, have allowed investors to pull sunny expectations about 2021 into 2020's markets.
CNBC: Do you believe that optimism is well-founded?
RF: The way we see it at TIAA, is that a bright light lies ahead for investors, but only at the end of a dark tunnel. The next few quarters could be volatile, but the probable end to the health crisis should help distressed parts of the economy stage a strong comeback bolstered by considerable consumers' resilience and unusually high savings rates.
CNBC: Many Americans were struggling to save for the future before this crisis. How has the pandemic impacted the problem?
RF: The Covid-19 pandemic has only compounded this issue, leaving many Americans feeling financially fragile. Only 4 in 10 Americans feel as though they're on track toward their retirement savings goals. Unfortunately, these health and economic crises have affected minority communities the most. Private and public sectors need to come together to think through how to help rebuild these communities to address the inequities.
CNBC: How can people try to stay on track with their savings even during this volatile time?
RF: Plan for the long-term. Sources of guaranteed income, including annuities, are a great option for individuals who are worried about market uncertainty and volatility. Diversifying your portfolio can also help, but don't try to track the market's constant ups and downs. In addition to protecting your retirement plans, experts recommend that you have about six months' worth of living expenses saved in a readily available account that perhaps doesn't fluctuate with the markets.
CNBC: You've just announced you're retiring as CEO of TIAA. A lot of people are also in a transitory period at the moment, contemplating career changes and trying to figure out their next steps. What advice would you give them?
RF: I recognize that my decision to retire is a privilege. Many Americans who have lost their jobs in the coronavirus pandemic have been forced to adapt and pursue new opportunities. My advice – which was bestowed upon me by mother, a long-time school teacher – would be to try to look for opportunities that challenge you and provide you with a chance to learn. One of the things I've learned, which may be helpful to consider during a transition, is to see your career more like a climbing wall than the traditional career ladder. The path forward may not always be a straight line. Instead, it could be a series of vertical and lateral movements. The key is always to keep growing.