Trump Says US Economy Powering Through Fed Chair Powell’s ‘Incompetence’ After Q2 GDP Print
The BEA’s revised estimates showed 3.8% seasonally adjusted annual growth, above the 3.3% rate estimated, on average, by economists, with the real personal consumption expenditure upwardly revised to 2.5%.
President Donald Trump lauded the “great” economic numbers that were released Thursday morning, while also taking a potshot at the Federal Reserve under Chair Jerome Powell for his hawkish stance.
“Great Numbers came out today on the Economy (3.8%!), and the SUCCESS we are having, but our Interest Rates are too high!” Trump said in a social-media post late Thursday. The president was referring to the final second-quarter GDP data released by the Bureau of Economic Analysis (BEA).
The BEA’s revised estimates showed 3.8% seasonally adjusted annual growth, above the 3.3% rate estimated, on average, by economists, with the real personal consumption expenditure upwardly revised to 2.5%.
All three major indices declined moderately on Thursday, as strong data tempered expectations for a rate cut. The stock market was on a record-setting streak following the central bank’s quarter-point interest rate cut at its September meeting but has pulled back from its highs amid profit-taking.
For the year-to-date period, the SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) are up 13.3% and 16.5%, respectively.
On Stocktwits, retail sentiment toward the SPY ETF has shifted to ‘bearish’ (43/100) as of late Thursday, down from ‘bullish’ a day ago, while the mood toward the QQQ ETF has remained ‘bearish’ (40/100). The message volumes on both streams were ‘high.’
Among other data released Thursday were weekly jobless claims, which fell to a multi-month low, and the preliminary August trade deficit data, which showed a narrower goods deficit than the previous month as imports declined more steeply than exports.
Trump lamented that the interest rates were “too high.” “If it weren’t for Jerome ‘Too Late’ Powell, we would be at 2% right now, and in the process of balancing our budget,” he added. The Fed funds rate is currently at 4.00%-4.25%, and most economists expect two quarter-point cuts before the end of the year and a couple more early next year, taking rates to a more neutral level.
The good news, according to Trump, is that “we’re powering through his Incompetence, and we’ll soon be doing, as a Country, better than we have ever done before!”
Trump nominated Fed Governor Stephen Miran, a recent appointee, on Thursday, argued that the Fed funds should be at least 1-½ to 2 percentage points lower than where they should be and called for a series of half-point cuts. He sees the mid-2% range as the neutral rate.
Following Thursday’s data, Comerica Chief Economist Bill Adams said odds favor additional monetary stimulus over the next 12 months. The economist also sees Trump’s tax cuts and increased government spending juicing growth.
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