Is Jay Powell Forcing America Into a Recession?

Why is the Fed chairman, Jerome Powell, stubbornly clinging to his high interest rate policy?Indeed — why is Mr. Powell clinging to his job?A Federal Reserve governor, Adriana Kuegler, just announced her resignation today, effective August 8.I believe President Trump can actually name his own governor to replace her — and then appoint that person as chairman of the Fed. Subject to Senate confirmation.There are rumors that another Fed governor — Michael Barr — is about to resign, giving Mr. Trump another option.I don’t think we’re in a recession. Yet the July jobs report was terrible — with 258,000 downward revisions in May and June.And over the past three months, private sector job gains are averaging only 52,000, where you really only need 125,000 or 150,000 to keep the economy going strong.The small business household survey dropped another 260,000. And over the past three months it has averaged a decline of 288,000.These are rough numbers.Fortunately, average wage earners are doing okay, with incomes going up by more than 5 percent. About twice the inflation rate.That’s the best part of the story. And the tax-free tips and overtime will kick in before long.The strongest part of the economy is business investment — with full cost expensing for factories as well as equipment.A Fed governor, Christopher Waller, in his dissent at the meeting Wednesday, has the story completely right, though. Monetary policy is too restrictive. Mr. Powell’s obsession with tariffs is completely misplaced.Mr. Waller even anticipated the downward job revisions. And noted that private sector payroll growth is near stall speed.And he said that “total inflation is close to our target at just slightly above 2 percent, if we put aside tariff effects that I believe will be temporary.”And he concluded that the Fed’s current policy at 4.5 percent is 1.5 percentage points higher than it needs to be right now.I think the Fed should be cutting rates immediately.Looking at these job statistics revisions, they should have been cutting rates in May and June as well as the July meeting this past week.The One Big Beautiful Bill is going to have an enormously positive economic impact, but right now Mr. Powell’s tight money is damaging housing, autos, credit cards, you name it.That is why Mr. Powell should step down immediately and let Mr. Trump put his own people in place in order to save the economy until the full thrust of Trumpian economic growth can take off.From Mr. Kudlow’s broadcast on Fox Business Network.

Is Jay Powell Forcing America Into a Recession?

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