Shortly after World War II, President Harry S. Truman signed the Employment Act of 1946 into law. The primary goal of this legislation was to ensure job availability for returning soldiers and to transition the economy from wartime production. The act, however, had a more significant long-term impact by establishing the White House Council of Economic Advisers (CEA). For over 75 years, the CEA has provided official economic analysis and advice to U.S. presidents.
The creation of the CEA was a notable development for the economics profession, as it offered a formal advisory role to the President of the United States, a privilege not commonly accorded to other professions.
Despite enacting the law, President Truman was initially hesitant to appoint members to the council. Following external pressures, he eventually appointed two Ph.D.-trained economists and a lawyer who had begun but never completed an economics Ph.D. Edwin Griswold Nourse, who obtained his economics doctorate from the University of Chicago, served as the first chair. Nourse later reflected that Truman showed little genuine interest in economic counsel, favoring insights from business and political figures.
In the mid-20th century, economists were gaining entry into policy circles but had limited influence. As noted by Binyamin Appelbaum in “The Economists’ Hour,” institutions like the Federal Reserve were primarily led by lawyers and businesspeople at that time. In contrast, economists working there, such as Paul Volcker, operated with little recognition. This scenario reflected a broader presidential skepticism toward economic and scientific expertise.
However, over subsequent decades, economists significantly increased their policy influence. By the late 1970s, the number of government economists had surged from about 2,000 to over 6,000. Economists began to assume key leadership roles: Arthur F. Burns led the Federal Reserve in 1970, George Shultz became Treasury Secretary in 1972, and Volcker eventually became the Fed’s chairman in 1978.
From the 1980s onward, economists such as Milton Friedman and Larry Summers emerged as influential policy thinkers. However, in recent years, their prominence has waned, with non-economists increasingly steering economic policy. For example, Federal Reserve Chair Jerome Powell is a former investment banker and lawyer. Under President Donald Trump, the CEA’s chairman was not included in the Cabinet, signaling a shift.
Currently, the head of President Biden’s CEA, Jared Bernstein, has a background in music and social work rather than economics. Prominent economic advisers to Vice President Kamala Harris, such as Brian Deese, Mike Pyle, and Deanne Millison, are also lawyers.
On various economic topics, from free trade to tax policy, the current political landscape has seen both the Trump and Harris camps adopt populist ideas, deviating from traditional economic principles. Allison Schrager, in a Bloomberg column, identifies Yale Law School as a notable source of influential economic thinkers today, despite not being an economics institution. Yale Law alumni, including JD Vance, Lina Khan, Brian Deese, and Mark Pyle, hold significant sway in current economic policymaking, often espousing a skepticism toward free trade and promoting industrial policy.
Schrager observes that Yale Law School accepts diverse thinkers and its prominence serves as a gateway to Washington elite, reflecting broader political shifts rather than an explicit ideological agenda.
Despite a decline in the influence of economists and free-market policies, economists like Janet Yellen still hold major positions, such as leading the U.S. Treasury Department. Scholars like Mark Hallerberg suggest that appointing economists during times of economic turmoil signals stability and expertise to markets.
Ultimately, if the economy faces challenges or current populist policies falter, economists might regain prominence. The continued academic background in economics of figures like Trump and Harris also indicates that economic perspectives still hold some sway in political debates.
