Trump: ‘The Fed Loves Watching US Manufacturers Struggle’

Donald Trump launched into his first post-G-7 Fed critique shortly after lunchtime on Tuesday, accusing the central bank of reveling in the purported misery of unnamed American manufacturers.

“The Federal Reserve loves watching our manufacturers struggle with their exports to the benefit of other parts of the world”, Trump assessed.

The president’s comments came hours after Bloomberg published an Op-Ed penned by Bill Dudley, who called on the Fed to openly rebuke Trump and suggested the central bank give serious consideration to the possibility of trying to orchestrate his ouster in 2020.

Read more: Let’s Call It What It Is: Bill Dudley Just Said The Fed Should Overthrow Donald Trump

The latest regional factory data out Tuesday actually showed a solid rebound in the Richmond gauge, which bounced to 1 in August versus -12 last month. Shipments rose to 5 from -13 and new order volume jumped to 2 on the heels of a -18 print in the prior month.

“Has anyone looked at what almost all other countries are doing to take advantage of the good old USA?”, Trump went on to wonder.

It wasn’t clear what he meant, but one assumes the president is again alluding to “currency manipulation”, in the form of rate cuts and other monetary easing which, obviously, operate though the FX channel.

“Our Fed has been calling it wrong for too long!”, the president shouted.

Of course, the irony in all of this is that Trump’s trade war has contributed directly to a global manufacturing downturn that has hit other nations (e.g., Germany and China) far harder than the US.

Export-dependent economies like South Korea and Singapore have had an exceedingly difficult time grappling with the fallout from the clash between the world’s two largest economies.

Although the IHS Markit gauge for US manufacturing activity did print in contraction territory this month for the first time since 2009, regional surveys have inflected for the better after a swoon and ISM hasn’t yet “caught down” to the rest of the world’s reality.

The point is two-fold: 1) if anybody is to blame for US manufacturers’ angst, it’s Trump and his trade war, and 2) factory activity in the US is holding up far better than it is in the rest of the world.

More importantly, though, Trump is attempting to do the same thing to the Fed that he’s endeavored to do with Democrats – namely paint them as unpatriotic enemies of the state.

This all comes back to the president worrying that the economy is set to roll over ahead of an election year. The latest NBC/Wall Street Journal poll showed voters approve of his handling of the economy by the narrowest margin in quite a while.


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3 thoughts on “Trump: ‘The Fed Loves Watching US Manufacturers Struggle’

  1. Instead of blaming the Fed or having them in an equation, is to understand that the trouble with most economies today is rooted in the fact that the majority of wealthy people are not investing private investment, instead of investing in new infrastructure or expanding spending in future growth (for industry) these wealthy tycoons are playing with derivatives and supercharging their personal wealth, while future value decays. This is actually a fairly interesting area of research, which dates back centuries, and even the stupid Fed mentioned a few months ago:

    “Real nonresidential private fixed investment appeared soft in the second quarter. Real private expenditures for business equipment and intellectual property looked to be roughly flat, as nominal shipments of nondefense capital goods excluding aircraft moved sideways in April. Forward-looking indicators of business equipment spending pointed to possible decreases in the near term. ”

    Here’s a FRED chart:

    Also see: The absence of spatial correlation in the fitted residuals raises the possibility that the factors that lead countries within a region to follow similar growth paths work through the rate of equipment investment.

    Also: DeLong and Summers (1991) found that the post-World War II cross-
    country dataset contained an extraordinarily strong correlation between
    growth and private investment in machinery and equipment. Public
    investment by state-owned monopolies did not do it. Investment in
    structures did not do it. The correlation was very strong in OECD-class
    and middle-income economies.

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