The Politics, Economy, and Elsewhere
The FED slashes its growth rate for 2025 from 2% to 1.7%. I suspect they are hopelessly being optimistic unless they are thinking someone will finally come to their senses. Mabe? I think not. One far out assumption I read earlier this week was Trump attempting to crash the economy and then turn it around so as to look like a hero? “Stagflation? Fed sees higher inflation and an economy growing by less than 2% this year,” CNBC.
“The rate-setting Federal Open Market Committee downgraded its collective outlook for economic growth to 1.7%, down from the last projection of 2.1% in December. In the meantime, officials hiked their inflation outlook, seeing core prices growing at a 2.8% annual pace, up from the previous estimate of 2.5%. The moves suggested the central bank sees the risk of a stagflation scenario, where inflation rises as economic growth slows.”
The Fed still expects to make two rate cuts for the remainder of 2025, according to the median projection. This, even as the inflation outlook was raised.
The so-called dot plot indicated that 19 FOMC members, both voters and nonvoters, see the benchmark fed funds rate at 3.9% by the end of this year, equivalent to a target range of 3.75% to 4%. The central bank kept its key interest rate unchanged in a range between 4.25%-4.5% on Wednesday.
A “Purge of data experts raises alarms over economic reports” as reported by POLITICO. The Trump administration (if one could call it such) dismissed advisers to key statistical agencies behind major economic reports, sparking warnings that the cuts will jeopardize the quality of data critical to policymakers and Wall Street investors.” This type of a move is to blur the reality of the situation or in this instance the reality of the economy with the general public. It gives Trump the ability to blame the score keepers for a false narrative.
The Trump administration has dismissed advisers to key statistical agencies behind major economic reports, sparking warnings that the cuts will jeopardize the quality of data critical to policymakers and Wall Street investors.
Economists, academics and corporate officials serving on a board of unpaid advisers to the Labor Department’s statistical bureau were told this week they were no longer needed, two of the former members told POLITICO. Similar committees that advised the Commerce Department’s Bureau of Economic Analysis and the Census Bureau have also been let go. And the Federal Housing Finance Authority placed workers who assisted with its widely cited home price index on administrative leave Wednesday.
Economists, academics and corporate officials serving on a board of unpaid advisers to the Labor Department’s statistical bureau were told this week they were no longer needed, two of the former members told POLITICO. Similar committees advising the Commerce Department’s Bureau of Economic Analysis and the Census Bureau have also been let go. And the Federal Housing Finance Authority placed workers who assisted with its widely cited home price index on administrative leave Wednesday.
Economist Claudia Sahm: “We’re already at a place where a lot of people look at the statistics coming out of the government and are very skeptical.” Ms. Sahm began raising red flags about cuts to statistical agencies earlier this month. “This isn’t the right time to be undermining our confidence in that data.”
Trump has repeatedly questioned the validity of BLS job estimates but has also touted the agency’s reports when they reflected a healthy labor market during both of his administrations.
To sum it up . . . The alarms being raised by Sahm and others are coming amid growing concern about the economy. Fed policymakers on Wednesday lowered their growth forecast for 2025 (above) and bumped up their estimate for future inflation. The stock market surge that followed Trump’s election to a second term has largely been erased amid uncertainty around future tariffs. Consumer sentiment has faded and business leaders say Trump’s unpredictable agenda could cause investment and hiring to stall.
I turn to CATO Institute for a summation of Trump’s first term as US President. The president’s myopic focus on trade has left him without a coherent strategy elsewhere.
“The Tragedy of Donald Trump: His Presidency Is Marred with Failure.” Trump’s performance record as president is comprised of an unbroken string of broken promises, opportunities squandered, principles violated, and intentions abandoned. The president’s aversion to genuine free trade and the curious belief that buying inexpensive, quality products from abroad is a negative created problems with many close allies, including Canada, Mexico, Japan, South Korea, Australia, and multiple European states. Only with Israel are Washington’s relations substantially improved, and that reflects the president’s abandonment of any serious attempt to promote a fair and realistic peace between Israelis and Palestinians.
This is an extraordinarily bad record after almost three years in office. It also does not appear to be much better in 2025 and we have three more years of a failing presidency and the possibility of a Trump insurrection. It is rather discouraging the nation turned to a failure of a presidency for a second 4 years.