Republican

Jerome Powell

April

when

Jerome Powell, the Federal Reserve’s top dog, stood in Dallas and declared with confidence — or perhaps delusion — that there’s no rush to lower interest rates.
“The economy is not sending any signals that we need to be in a hurry,” Powell said at the Dallas Fed event on November 14. Really? Inflation is still above the Fed’s 2% target. Rent inflation is stuck, stubborn as ever, and the Cleveland Fed says it might not cool off until 2026. But Powell thinks he has all the time in the world to figure it out.
He’s not wrong that the economy has strengths. A 4.1% unemployment rate? Impressive. Growth cruising at 2.5% annually? Not bad. Consumer spending is solid, and businesses are still putting their money into investments.
<h3 id="span-style-font-weight-400-inflation-isn-t-waiting-but-powell-is-span">Inflation isn’t waiting – but Powell is</h3>
Powell even called the situation “remarkably good.” But there’s a catch: Inflation is eating into all of that. Prices are up, rent is through the roof, and wages aren’t keeping up. Yet Powell seems fine taking a slow, cautious approach, even if it means dragging this mess out longer than anyone can stomach.
Shelter costs made up over half of October’s CPI increase. That’s not a minor problem; it’s a crisis. Fewer people are moving or signing new leases, which means the CPI isn’t even capturing the full picture.&nbsp;
Powell’s response? Wait. He argues that the economy’s current strength gives him room to “approach our decisions carefully.” Translation: Do nothing for now.
Omair Sharif, who heads Inflation Insights LLC, <a href="https://www.bloomberg.com/news/articles/2024-11-18/powell-may-be-waiting-until-2026-for-housing-inflation-to-cool" rel="noopener noreferrer nofollow" target="_blank">said</a>, “The optics of rising inflation, even if lagged data like rent, make communication more challenging, which ultimately could make it harder to cut rates.”
Michelle Bowman, a Fed governor, outright voted against the September rate cut because she wanted a smaller reduction. She’s not alone in her frustration. Many other officials share it.
<h3 id="span-style-font-weight-400-trump-vs-powell-round-two-span">Trump vs. Powell: Round two</h3>
Just when you thought Powell’s job couldn’t get more complicated, here comes Donald Trump, back for another round. Barely two days after Trump was announced as president-elect, the tension between him and Powell was already thick in the air.
At a press conference following the Fed’s last policy meeting, Powell was asked if he’d step down if Trump asked him to. His answer? A sharp, “No.”
Another reporter pressed him on whether a president could fire or demote a Fed chair. Powell’s response was equally blunt: “Not permitted under the law.” He paused after each word for emphasis, like he was daring Trump to test him.
If history is any guide, Trump will probably do just that. During his first term, the president repeatedly slammed Powell for not slashing interest rates faster. At one point in 2020, Trump told reporters he had the “right to remove” Powell and called his decisions “bad.”
Trump has also openly said he thinks the president should have a say in interest rate decisions. “I feel the president should have at least a say in there,” he said in August, boasting about his business instincts. “I made a lot of money. I was very successful.”
The idea of a president meddling with the Fed’s decisions flies in the face of its congressionally mandated independence. The Fed isn’t supposed to answer to the White House—or anyone else.
But Trump doesn’t care about tradition. If Republicans take over Congress, Trump might find it easier to push the Fed into a corner, especially with six of the nine Supreme Court justices appointed by Republican presidents.
<h3 id="span-style-font-weight-400-economic-growth-masks-bigger-problems-span">Economic growth masks bigger problems</h3>
Both Powell and Trump like to brag about economic growth, but neither seems interested in addressing the cracks beneath the surface. Powell cites strong consumer spending and a low unemployment rate as evidence that the economy is thriving.
Trump, during his first term, oversaw 2.5% annual GDP growth, which slightly edged out Obama’s numbers. He also boasted about job creation, with unemployment hitting a 50-year low of 3.5% in early 2020.
But these stats don’t tell the whole story. Trump’s tax cuts in 2017 slashed corporate rates from 35% to 21%, giving businesses a short-term boost. At the same time, the federal deficit surged, growing from $585 billion in 2016 to $984 billion by 2019.
The national debt increased by $7.8 trillion under Trump’s watch, a staggering number that undermines his claims of economic brilliance.
Then came the pandemic. Unemployment spiked to 14.7% in April 2020, wiping out years of progress overnight. Trump’s response included signing the $2.2 trillion CARES Act, which provided relief but also highlighted the fragility of his economic policies. The recovery was uneven, with low-income families bearing the brunt of the crisis.
Powell isn’t off the hook, either. His slow response to inflation and his reluctance to act decisively have left millions of Americans struggling to keep up with rising costs. He claims to be playing the long game, but for people living paycheck to paycheck, his strategy offers little comfort.
<h3 id="span-style-font-weight-400-trump-s-economic-legacy-span">Trump’s economic legacy</h3>
Trump’s economic record is a mix of bold ideas and glaring flaws. His trade wars with China disrupted global supply chains and raised costs for American businesses. While renegotiating NAFTA into the USMCA brought some benefits, it didn’t address deeper structural issues in trade.
Deregulation was another cornerstone of Trump’s presidency. He rolled back over 100 environmental rules and loosened financial regulations, moves that businesses welcomed but critics warned could have long-term consequences.
His push for lower interest rates, often at Powell’s expense, showed his preference for short-term market gains over sustainable growth.
Despite these efforts, Trump’s policies didn’t shield the economy from the pandemic’s impact. His response was reactive, focused more on optics than substance. 
Between Powell’s indecision and Trump’s impulsiveness, the U.S. economy is caught in a precarious balance. Neither seems to be fit for the job at the moment though, that’s for sure.

Fed’s Jerome Powell has no idea what he’s doing – and president Trump wouldn’t do any better

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