Donald Trump didn’t learn much from the commentary that accompanied the second-worst consumer sentiment print of his presidency.
“The main takeaway for consumers from the first cut in interest rates in a decade was to increase apprehensions about a possible recession”, Richard Curtin, director of the University of Michigan consumer survey, said in a statement, underscoring the notion that the president’s efforts to draw attention to the Fed and force rate cuts may be backfiring.
Sources (some Republican) who spoke to the Washington Post last week suggested the president is becoming increasingly paranoid about the economy ahead of 2020. The angst which is apparent to those close to Trump boiled over last Wednesday when an 800-point plunge in the Dow prompted a series of wild tweets about the Fed and the “crazy inverted yield curve“.
With stocks up sharply on Monday, Trump probably should have let sleeping dogs lie, but instead, he took to Twitter to launch a fresh attack on the Powell Fed.
“Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed”, the president said, before positing a conspiracy.
“The Democrats are trying to ‘will’ the Economy to be bad for purposes of the 2020 Election”, he said, without citing any evidence. He called this imaginary plot “Very Selfish!”
An NBC/Wall Street Journal poll released over the weekend showed Americans still approve of Trump’s handling of the economy, but the margin shrank to just 3ppt.
Trump continued on Monday, lamenting the resiliency of the greenback. “Our dollar is so strong that it is sadly hurting other parts of the world”, he wrote, without even a passing acknowledgement of the fact that if you’re looking for the culprit when it comes to explaining what’s “sadly hurting other parts of the world”, it’s the trade war.
This month’s turmoil has at least as much to do with trade escalations as it does with Fed policy, although the waters are hopelessly muddy thanks to the fact that Trump is now seemingly injecting uncertainty into the trade discussion solely to engineer rate cuts.
The president proceeded to demand aggressive cuts to “the Fed rate”.
“The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well”, Trump declared. He is apparently oblivious to the mechanics of the Fed’s balance sheet policy. Runoff stopped this month and it seems as though nobody has apprised him of what will mechanically unfold in the months ahead. That said, he is obviously calling for “outright” (so to speak) QE, something which may in fact be necessary for all the reasons outlined here.
The president’s latest attacks and exhortations come days ahead of Powell’s hotly-anticipated remarks in Jackson Hole, something Trump is doubtlessly aware of.
If you’re wondering what Trump imagines would happen in the event the Fed cut rates by 100bps in “a fairly short period of time” and resumed large-scale asset purchases, the answer is that, quote, “our Economy would be even better, and the World Economy would be greatly and quickly enhanced”.
That, Trump shrieked on Monday, would be “good for everyone!”