No one knows. Which helps explain the anticipation surrounding Yellen's speech Friday at the economic conference sponsored every August in Jackson Hole, Wyo. by the Federal Reserve Bank of Kansas City. Given that this year's topic is labor markets, Yellen is sure to spell out her latest assessment of the U.S. job market.
Whatever she says — or, perhaps, doesn't say — will shape perceptions of when and how aggressively the Fed will raise rates.
Yellen has frequently characterized the job market as weaker than the unemployment rate suggests. She's noted, for example, that the jobless rate, now a nearly normal 6.2 percent, belies other unhealthy trends: Weak pay growth, a sizable number of part-timers who want full-time work and high proportions of people who've been looking for a job for more than six months or have stopped looking.
Might Yellen describe those trends as chronic problems with no end in sight? Or as likely temporary drags on the job market, destined to fade as the economy further improves? Investors will seek any sign of a coming rate hike because it would mean higher rates on business and consumer loans and could hurt stock prices.
At Jackson Hole, Bernanke would sometimes use his speeches to telegraph actions the Fed was considering. Yellen could take the opportunity to shed light on the Fed's plans for withdrawing the extraordinary economic support it's provided since 2008.
"The road ahead will get much tougher for Yellen when she starts outlining the Fed's exit strategy," said David Jones, chief economist at DMJ Advisors and the author of a book on the Fed's first century. "Any change could be accompanied by significant market instability."
This year, the Fed has been paring its monthly bond purchases, which have been intended to keep long-term rates low. Yellen has stressed that even after the bond purchases end this fall, the Fed will keep rates low and maintain its vast investment portfolio to keep downward pressure on rates.
The impending end of the purchases — a step investors once anticipated with dread — is now being taken in stride. The market has remained calm, and stocks are up this year, suggesting that Yellen's reassurances have had an effect.
That said, her first six months haven't been without stumbles. Consider her first news conference. Responding to a question, Yellen said that when the Fed stated it would keep its benchmark rate ultra-low for a "considerable time" after its bond purchases end, that phrase meant around six months.
Stocks sank on fears that rate increases could start sooner than expected.
Asked about her six-month comment at her next news conference, Yellen de-coupled the phrase "considerable time" from any specific period.
"It depends on how the economy progresses," she explained.
Diane Swonk, chief economist at Mesirow Financial, said Yellen was trying to be clear without perhaps recognizing how much a Fed chair's words can be over-interpreted.
"Yellen is a much clearer speaker than past Fed chairmen," Swonk said. "But Yellen learned the dangers from being too clear. She will never use the words 'six months' again."