Economy
Trump’s ‘golden age’ economic message undercut by his desire for much lower interest rates – which typically signal a weak jobs market
Joshua Stillwagon, Babson College
President Donald Trump seems to want to have it both ways on the U.S. economy.
On the one hand, he recently said the economy is in its “golden age” and referred to the U.S. as the “hottest country anywhere in the world.”
Yet at the same time, he has outright demanded that the Federal Reserve sharply slash interest rates to fuel economic activity. And his recently handpicked governor, Stephen Miran, has led the charge in pushing for a bigger cut than preferred by his new colleagues at the Fed.
When an economy is strong, central banks typically don’t cut interest rates and may even raise them to avoid spurring inflation. And so to support his argument for large cuts, Miran has played up “downside risks” to the economy and a weakening labor market, contrasting with Trump’s talk of a “golden age.”
Trump and Miran also seem to be ignoring the problem of inflation, which the president has said “has been defeated” and Miran considers close enough to the Fed’s target of 2%. Yet, inflation remains high and has been picking back up in recent months – one of the core reasons the Fed has taken a gradual approach to lowering interest rates.
I’m a macroeconomist, which means I study big-picture factors affecting an economy, such as interest rates.
It’s well known that lower rates spur faster growth, and of course all presidents want a stronger economy on their watch. But the Fed’s job when it sets interest rates is to deal with whatever reality the data shows – and make decisions accordingly.
Is the economy hot or not?
In the simplest terms, the Fed raises interest rates when the economy is “hot,” or inflation is above the Fed’s 2% target, and lowers them when there are concerns about unemployment.
At its most recent meeting, in September, the Fed lowered rates a quarter of a point, citing slowing jobs growth, and increased economic uncertainty. Trump nominee Miran was the only one of the 12 members of the Fed’s policy-setting committee to instead vote for a more aggressive half-point cut.
The only credible rationale for that large of an interest rate cut, in the face of still-high inflation, is by believing the labor market is incredibly weak. According to the Fed’s preferred measure, the personal consumption expenditures index, inflation has been accelerating all summer and was 2.7% at the end of August, well above the Fed’s 2% target.
There’s no doubt jobs growth has slowed considerably in recent months, but enough to completely ignore the risk of driving inflation higher? At this point at least, the Fed doesn’t think so.
And if the economy were in fact running hot, as the president claims, the Fed would have little choice but to keep rates flat or raise them, especially given elevated inflation.
Risks of following political whims
This situation gets at the heart of why central bank independence matters.
Trump’s efforts to influence the Federal Reserve have not been subtle and break with Congress’ intention to insulate the Fed from political manipulation. Besides pressing for big rate cuts, he has tried to fire a member of the Board of Governors over questionable allegations and mused about removing Fed Chair Jerome Powell.
The risks of following the wishes of a president in the face of what the data shows were starkly demonstrated in 2021, when Turkey’s president, Recep Tayyip Erdogan, fired the head of the country’s central bank. The central banker was pushing rates higher to tame inflation, which was at about 20%, but Erdogan demanded they be lowered. In response, Turkey’s lira plunged to record lows and inflation soared to over 70% in 2022.
Something similar could happen in the U.S. if Trump continues down the same path of meddling with the Fed. As a sign of how much Wall Street worries about this risk, a recent study estimated that if Trump followed through on his threat to fire Powell, the stock market could lose an estimated US$1 trillion as a result.
That’s because the Fed’s credibility rests on its ability to make decisions driven by economic evidence, not political expedience. That independence means policymakers must weigh data on inflation, jobs and growth rather than election cycles or partisan demands.
Justifying deeper rate cuts
Looking ahead to the Fed’s next meeting Oct. 28-29, policymakers face a delicate balancing act. With inflation still running above target and signs of slowing jobs growth, it needs to lower rates enough to prevent a downturn but not so low that inflation spirals out of control.
Traders are putting near-100% odds of two more quarter-point cuts this year, one on Oct. 29 and another in December. This would bring the Fed’s benchmark interest rate to a range of 3.5%-3.75% by the end of 2025, down from 4%-4.25% now.
Based on Miran’s own interest rate projections, he’s likely to again push for a larger cut of a half-point or more at both meetings, as he believes the Fed’s benchmark rate should be below 3% by the end of the year.
To me, as an economist, the only way a Fed acting independently could reasonably justify such a significant cut in rates in the next few months is if the unemployment rate begins rising steadily, with the economy clearly at risk of slipping into a recession.
Joshua Stillwagon, Associate Professor of Economics, Babson College
This article is republished from The Conversation under a Creative Commons license. Read the original article.
News
Money Management: The Importance of Financial Literacy
You may have mastered the core subjects like math and grammar in school, but financial literacy – or understanding the basics of money management in order to help you make better financial decisions – often goes overlooked before adulthood. It’s not so much a course of study as it is a plan of action. When you understand how to earn, save, spend and invest wisely, you aren’t just building a stable future for yourself, but your family and community as well.
(Feature Impact) You may have mastered the core subjects like math and grammar in school, but financial literacy – or understanding the basics of money management in order to help you make better financial decisions – often goes overlooked before adulthood. It’s not so much a course of study as it is a plan of action.
Financial literacy in the United States has remained stagnant at generally low levels for several years, according to research from TIAA Institute and the Global Financial Literacy Excellence Center, with even lower levels among Gen Z. Yet greater financial literacy – including key aspects such as goal-setting, budgeting, saving, credit management and investing – is strongly linked to better financial outcomes, including lower rates of debt constraint and financial fragility.
While emboldening yourself to understand financial terms can be a little overwhelming at first, once you have a grasp of basic concepts you can begin to get a handle on your money and make better financial decisions. Simply put: When you understand how to earn, save, spend and invest wisely, you aren’t just building a stable future for yourself, but your family and community as well.
From nonprofit partnerships to volunteer-led programs and fee online resources, Schwab and its employees help millions of people every year build the knowledge and confidence to take charge of their financial futures by serving as board members, mentors, role models and educators.
Because financial health is a lifelong journey, the earlier people learn vital money skills, the better. That’s why the financial advisory services provider develops education programs geared toward kids that continue into adulthood, helping people no matter where they are on their journeys.
Talk Money
It’s never too early to start a conversation about financial literacy. Having teens identify goals that are important to them – such as concert tickets or a first car – can kickstart coversations about money. Working with your child (and a financial advisor, if necessary) on a plan for saving to realize those goals can serve as a jumping off point. After achieving some success, their enthusiasm may grow, which is a powerful motivator to keep saving.
Support School Initiatives and Programs
Outreach programs that empower young people to make smart financial decisions is key to a bright future. Programs like Money Matters – Schwab’s flagship financial education program utilized by the Boys & Girls Clubs of America – gives young people hands-on experience with all aspects of money and investing.
This example, and others, don’t just include program funding – they build partnerships that create impact and opportunity with national collaborations that reach more than 17 million youth annually, empowering young people with the tools and confidence to make smart financial decisions for life.
Spread the Financial Love
Championing financial literacy empowers everyone – individuals, families and communities. By serving as a board member, mentor, role model or educator to help bring financial literacy to others in your community, you can supply the tools and knowledge to lead programs that focus on giving back, empowering future generations in countless ways.
To learn more about financial literacy and find resources to empower your local community, visit SchwabMoneywise.com.
Photo courtesy of Shutterstock
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SUVs and EVs Take Center Stage at the 2026 New York International Auto Show
(Feature Impact) The 2026 New York International Auto Show is shining a spotlight on the latest in automotive innovation, from advanced technology to the growing shift toward electric vehicles. One automaker, Kia, is using the show to highlight two versatile SUVs designed to offer more space, capability and flexibility for modern drivers.
Watch this video to learn more
The all-new 2027 Kia Seltos has grown in size, offering a roomier interior with additional legroom, headroom and cargo space. It also adds a hybrid powertrain, making it the only vehicle in its class with three powertrain options. The SUV comes packed with advanced safety features, a more capable all-wheel-drive system and premium interior touches, including dual 12.3-inch display screens and an available panoramic sunroof.
The automaker is also showcasing the all-electric EV3, a compact SUV designed to make electric vehicle ownership more practical. With an estimated range of up to 320 miles, fast-charging capability and optional all-wheel drive, it balances performance, technology and everyday usability. Its intuitive features and flexible design make transitioning to electric simpler for a wider range of drivers.
Both models represent Kia’s commitment to providing options that blend capability, innovation and style. To learn more, visit Kia.com.
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Welcome to the Consumer Corner section of STM Daily News, your ultimate destination for savvy shopping and informed decision-making! Dive into a treasure trove of insights and reviews covering everything from the hottest toys that spark joy in your little ones to the latest electronic gadgets that simplify your life. Explore our comprehensive guides on stylish home furnishings, discover smart tips for buying a home or enhancing your living space with creative improvement ideas, and get the lowdown on the best cars through our detailed auto reviews. Whether you’re making a major purchase or simply seeking inspiration, the Consumer Corner is here to empower you every step of the way—unlock the keys to becoming a smarter consumer today!
Economy
Feeding the Economy Report Says U.S. Food, Agriculture Add $10.4 Trillion
The 2026 Feeding the Economy report says U.S. food and agriculture industries generate $10.4 trillion in economic value and support 48.7 million jobs.
New Feeding the Economy Report Highlights Food, Agriculture Industry Strength
America’s food and agriculture industries generated more than $10.4 trillion in economic value in 2026, accounting for nearly 20% of the U.S. economy, according to the 10th annual Feeding the Economy report released by 35 food and agriculture groups. The new farm-to-fork study also found the sector supports 48.7 million jobs nationwide, including 24.3 million direct jobs across farming, food manufacturing, processing, distribution, retail, and foodservice.
The report points to continued resilience despite inflation, trade uncertainty, and ongoing pressure on farmers and producers. It found food and agriculture generate more than $3 trillion in wages and $1.35 trillion in tax revenue, while U.S. exports totaled $177.3 billion. At the same time, the study flagged softer areas to watch, including flat direct employment in production agriculture and food manufacturing, along with a year-over-year decline in exports. For the food and beverage industry, the report reinforces just how deeply agriculture remains tied to jobs, supply chains, and broader economic stability.
Source:
Tenth Annual “Feeding the Economy” Report Demonstrates Strength and Resilience of the American Food and Agriculture Industries Amid Ongoing Economic Pressures — Feeding the Economy via PR Newswire
Further information:
Feeding the Economy
View the original press release on PR Newswire
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