Dear Commons Community,
Over the past two days, President Trump has been blaming the U.S. Federal Reserve for the weakening economy and the stock market plunge in December. When the stock market was surging earlier this past year, Trump claimed the credit commenting that his tax reform policies were the reason. Now that the stock market is tanking, he is placing the blame on the the Federal Reserve for raising interest rates. As reported by Reuters:
“The only problem our economy has is the Fed. They don’t have a feel for the market,” Trump said on Twitter.
Speaking to reporters in the Oval Office, Trump also said U.S. companies were “the greatest in the world” and presented a “tremendous” buying opportunity.
Asked if he has confidence in Treasury Secretary Steve Mnuchin, Trump said: “Yes, I do. Very talented guy. Very smart person.” His comments came after Mnuchin on Monday held a conference call with U.S. regulators to discuss plunging U.S. stock markets.
The call did more to rattle markets than to assure them. All three major U.S. stock indexes ended down more than 2 percent on the day before the Christmas holiday. The S&P 500 has lost about 19.8 percent from its Sept. 20 closing high, just shy of the 20 percent threshold that commonly defines a bear market.
Mnuchin also spoke on Sunday with the heads of the six largest U.S. banks, who confirmed they have enough liquidity to continue lending and that “the markets continue to function properly.”
Investors said his move to convene a call with the president’s Working Group on Financial Markets, known as the “Plunge Protection team,” may have weighed on sentiment.
Yesterday, Trump praised U.S. companies and said their lower stock prices present an opportunity for investors. “I have great confidence in our companies. We have companies, the greatest in the world, and they’re doing really well. They have record kinds of numbers. So I think it’s a tremendous opportunity to buy.”
U.S. stocks have dropped sharply in recent weeks on concerns over weaker economic growth. Trump has largely laid the blame for economic headwinds on the Fed, openly criticizing its chairman, Jerome Powell, whom he appointed.
“They’re raising interest rates too fast because they think the economy is so good. But I think that they will get it pretty soon,” Trump said, repeating his criticism.
Media reports have suggested Trump has gone as far as discussing firing Powell, and he told Reuters in August that he was “not thrilled” with the chairman. On Monday, Trump said “The only problem our economy has is the Fed.”
The Fed hiked interest rates again last week, as had been widely expected.”
We can breathe a sigh of relief now that Trump has eased our concerns for the country’s stock market turmoil. It’s the Fed, stupid!