Jerome Powell Will Face an Utterly Different Economy in a Second Term

Over his first term in office, Jerome Powell became arguably the most dovish chairman in the Federal Reserve’s modern history, giving priority to full employment in an era in which inflation seemed extinct. In his second term he may have to execute the reverse: giving priority to inflation at the risk of sacrificing jobs.

The pivot could be painful for both Mr. Powell and President Biden, who reappointed him in part on his dovish record, and reflects the substantial reordering of economic conditions in just the past year. Inflation, at 6.2%,...