Trump’s back on the war path, blaming Fed Chair Jerome Powell for lackluster job growth. Powell says the economy needs more time, and lower tariffs. But the deeper forces dragging on the economy aren’t obvious. Here’s what most people are overlooking…
By Peter Reagan
Donald Trump has a track record of announcing policies on social media. Praising some and hectoring others, using X and Truth Social the way past presidents used cabinet meetings and press conferences.
Maybe it’s a holdover from his time on television, or maybe that’s just his public persona. Whatever the reason, to the delight of his supporters and the chagrin of his detractors, Trump has no problem taking others to task.
One of the most recent targets of Trump’s public ire? Federal Reserve Chairman Jerome Powell.
Of course, this isn’t the first time that Trump has gone after Powell, but what has caused Trump to express his frustration most recently was ADP’s report on job growth.
What was in the report?
The report gave some disappointing news to Trump and the rest of the nation: current job growth is not where any of us want it. Joey Garrison and Paul Davidson with USA Today write:
Private employers added only 37,000 jobs in May, according to the ADP National Employment Report released on June 4, significantly fewer than the 110,00 jobs that economists polled by Reuters had predicted. It was the smallest gain ADP has monitored since March 2023.
That’s not the job growth that any of us wanted. And when you get into the details, some could interpret them as even more unflattering to Trump’s economic plans.
Leisure, hospitality and financial sectors produced the most newly added jobs in May…
No big surprise with the leisure and hospitality sectors hiring to prepare for the summer tourism months.
But, then, the other shoe drops.
…while 3,000 jobs were lost in manufacturing ‒ an area that Trump has tried to rejuvenate with his sweeping tariffs on imports. [emphasis added]
And that one has to hurt, especially since manufacturing has been a main focus area for Trump.
So, Trump took to Truth Social:
Now, this isn’t the first time he’s taken out his frustrations on Powell. Last month we asked whether the Fed was sabotaging Trump‘s economic recovery plans.
Do we really need lower interest rates right now?
To be fair to Trump, he has said repeatedly that it will take time to turn the U.S. economy around after the damage done by previous administrations. Trump has also said that there would be volatility and that it wouldn’t be smooth sailing to get the economy turned around.
So, the challenges with job growth can be seen as just part of the challenges that we’re having to go through to get to a healthy economy.
Think of it as ripping the bandaid off so that the cut can heal.
On the flip side, to be fair to Powell and the Federal Reserve, they have their dual mandate which is “pursuing the economic goals of maximum employment and price stability.”
Maybe that doesn’t sound like much of a challenge…
The Fed says it targets ‘maximum employment,’ but even they can’t define exactly what that means – and without a clear benchmark, how do we know when we’ve arrived?
“Price stability” is a little easier to quantify. The Fed have chosen to target a 2% average price growth per year (averaged over the long term, based on one of their many official inflation reports).
However we define the specifics of “maximum employment” and “price stability,” there’s a challenge. These two goals are, economically speaking, the exact opposite of one another.
According to Kathryn Underwood with Market Realist:
Raising interest rates is usually expected to both lower inflation and increase unemployment rates.
The opposite is true as well. Lowering interest rates both raises inflation and raises unemployment rates. Here’s why:
Lower rates boost spending, pushing prices higher. Higher rates encourage saving, slow the economy, and tamp down inflation. It’s a blunt instrument – and Powell only gets to choose which pain Americans feel.
That’s the challenge, in a nutshell. The Fed more or less has one big lever they can push or pull to speed up or slow down the economy.
Powell looks at today’s unemployment and sees it’s still 4.2%. Considering the 50-year average unemployment rate is about 6.2%, they aren’t concerned.
Trump wants action. Powell wants patience. And stuck between them is an economy full of Americans waiting for their paychecks to catch up with prices.
Are we asking the wrong question about job growth?
A big part of the assumption in the spat between Trump and the Federal Reserve is that the Fed can cause jobs to be created by reducing interest rates.
The thing is, the Fed doesn’t actually create jobs.
Who creates jobs? Businesses. And businesses are run by people.
So while the Fed can manipulate interest rates, other factors outside the Fed’s control can have a much bigger impact. To pick one recent example, the Covid-19 pandemic and the subsequent lockdowns, combined with a tsunami of federal spending, had a huge economic impact! Far outside the scope of anything the Fed could do by tweaking interest rates.
Another example: Liberation Day tariffs make prices go up (that’s the whole point! If prices don’t go up, the tariffs didn’t work.) Higher prices reduce spending. With fewer buyers, businesses lose revenue and cut jobs.
The point is, manipulating interest rates definitely affects the economy. It’s the Fed’s biggest tool. But there are many other tools that the Fed doesn’t have. Taxes, for example (and tariffs are taxes, make no mistake) play a huge role as well. Why else would President Trump be so insistent that the tax cuts in the Big Beautiful Bill are necessary for a stronger economy?
But there’s an even bigger factor. One that almost nobody in Washington is talking about.
The deeper problem isn’t just inflation or tariffs or even Powell’s decisions – it’s that the entire system is built on a foundation that loses value by design.
The government continues to overspend, and the Fed still tinkers with the cost of borrowing. But those are symptoms. The underlying cause is our monetary system itself: a currency with no backing, no anchor, and no natural limit on how much can be printed or borrowed.
As long as we rely on a fiat currency, our savings – and our purchasing power – will always be at risk. Value can disappear not because we made a mistake, but because someone else did.
That’s why we keep reminding people: it’s not just about hedging against inflation. It’s about reclaiming control of your own financial future. Diversifying your savings with hard assets like physical gold and silver means establishing your wealth on a firm foundation. One that Washington can’t inflate away. Here’s why more Americans are taking that step.