Donald Trump and Federal Reserve Chairman Jerome Powell (Getty)
Showing nerves over the US economy, less than four weeks before Congressional elections, Donald Trump has attacked the Federal Reserve as “crazy”.
Trump’s verbal assault was spurred by a diving stock market, which has dropped six days in a row and lost 5% of its value in the past week.
Trump has used the stock market as a rallying cry for his “winning” leadership, but the rise has only been 28% since Election Day 2016, compared to 43% over the same period at the end of the Obama Presidency.
The Fed is going wild. I don’t know what their problem is. They are raising interest rates and it’s ridiculous.
He added on Thursday, “It’s not right. It’s not necessary, and I think I know more about it than they do.”
The US economy is in a long-running period of growth that began in the Obama years. The Trump Administration fed the surge with a $1.5 trillion tax cut in December 2017 — although economists are warning that the measure and Trump’s pursuit of harsh tariffs against China and other countries may lead to a sharp downturn next year.
The Federal Reserve has raised interest rates, with Chairman Jerome Powell saying the economy is in a “particularly bright moment”. That step, encouraging people to move money into bonds, and the tariff fears appear to have caused the dip in the stock market.
There are wider doubts over Trump’s combination of tariffs which could push up consumer costs and disrupt supply chains, the tax cut and the rapidly-growing federal deficit, and a rise in borrowing costs that could dampen investment.
“Donald Trump has made uncertainty great again,” David Rosenberg, chief economist of Gluskin Sheff, summarized. “His policies are doing more harm than good.”
The Federal Reserve is still expected to raise interest rates in December for the fourth time this year.
Trump said Thursday that while “disappointed” with Powell, he does not plan to fire him.
In fact, the President does not have the power to remove the Chairman over policy disagreements.
Trump: Arms Sales to Saudi Take Priority Over Khashoggi Disappearance
Trump indicates that US arms sales to Saudi Arabia take priority over the disappearance and possible murder of journalist Jamal Khashoggi in the Saudi Consulate in Istanbul, Turkey.
Khashoggi’s fate, with grisly descriptions of his possible torture and dismemberment, has galvanized calls for Riyadh to be punished. But Trump played down the incident:
I would not be in favor of letting a country spend $110 billion [in arms sales], which is an all-time record, and letting Russia have that money and letting China have that money….
This took place in Turkey, and to the best of our knowledge, Khashoggi is not a United States citizen. Is that right?
Treasury Secretary Steven Mnuchin said Friday that he still plans to attend a major investment conference in Riyadh on October 23, despite business leaders and media firms withdrawing:
I am planning on going at this point. If more information comes out and changes, we could look at that, but I am planning on going….Saudi has been a very good partner.
The President of the World Bank, Jim Yong Kim, Viacom chief executive Bob Bakish, and Uber chief executive Dara Khosrowshahi have cancelled their attendance at the Future Investment Initiative. The Financial Times, CNN, and CNBC have withdrawn as media sponsors.