Trump: World's Best Economy Ever! Also Trump: I Can Has Bail-Outs?
Call it the Fire Alarm Presidency. Every day for the past 31 years -- errr, months -- Donald Trump has been breaking that glass and insisting that the normal rules don't apply because OH MY GOD, CAN'T YOU HEAR THOSE SIRENS BLARING? He had to close the border to Muslims because it was an emergency. He had to impose steel tariffs on our allies because what if a war breaks out and we don't have enough steel plants to build tanks, it's an emergency (wink, wink). He needs to build concentration camps on our southern border because starving, terrorized people are begging to be let in, and this too is an emergency. When Congress refused to fund his pointless border wall, he just declared an emergency and raided military funds to do it anyway. And on and on and on.
So too with the economy, where Donald Trump would prefer to throw the nation's entire reserve supply of rocket fuel into the economic engine and watch it burn, but finds his plans thwarted by that ungrateful bastard he appointed Lord High Fuel Attendant at the Federal Reserve.
Simmer down, Jerome Powell is not a gas station attendant. As Chairman of the Federal Reserve, Jerome Powell is in charge of monetary policy, tasked with keeping the nation's economy on an even keel by regulating short-term interest rates, federal bond buying, and how much cash banks need to hold in reserve.
Crudely speaking, when the Fed Chair is worried the economy is slowing down, he or she will give it a boost by cutting interest rates so that banks will lend and consumers will spend their money instead of saving it. But President Fire Bell feels entitled to use this tool all the time, because why keep anything in reserve when you have an election to win and your entire understanding of the economy begins and ends with the stock market?
In 2017, Donald Trump fired former Fed Chair Janet Yellen for being too short and gave the job to Powell, from whom he expected some degree of loyalty as well as a more appropriate height. Although the Federal Reserve has been fastidiously independent and data-driven for decades, Trump assumed Powell would hop to and cut rates when Trump shouted "Cut!" Instead, Powell continued Yellen's slow and steady pattern of gradually raising rates, as a rational person would expect in a period of low unemployment, low inflation, and a strong economy. But Donald Trump, who brags day and night about the booming stock market and "record low African American unemployment" would nonetheless like the same interest rates Obama got when he was desperately trying to pull the economy out of the Bush recession. And that would be ZERO, more or less.
In the past 18 months, Powell has raised rates four times, and Trump was reportedly seeking his ouster -- which is probably illegal, but that's hardly a problem in this administration. Yesterday, Powell finally cut interest rates by 0.25 percent, the smallest adjustment possible. And he took care to say that, while this might not be a one off, it should not be greeted as the first of many rate cuts to come. Which is why Donald Trump, and the markets, lost their shit yesterday afternoon. Because they want their bonfire of emergency rations, and they want it now.
Worse still, Powell all but blamed Trump's stupid trade war with China and Europe for the market instability, saying in his report to Congress, "Trade policy developments appear to have lowered trade flows to some extent, while uncertainty surrounding trade policy may be weighing on investment." That would be Fed-speak for, "Even in a good economy, people get mighty nervous about investing their money when the United States is governed by a goddamn lunatic who can upend trade policy in a tweet if people on his morning stories get him all riled up."
Okay, that's enough econsplainer for one day. If you want a TL,DR, Donald Trump is GRRRR, SO MAD that Fed Chair Jerome Powell won't credit Trump with a booming economy while simultaneously using emergency tools meant to cure a recession and blaming the dastardly Chinese and Europeans. Anyway, the labor market is tight, so think about asking for a raise.
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