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Trump Sees Economic ‘Potential to Go Up Like a Rocket’

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Trump and the US economy

In the last year, President Donald Trump has publicly expressed displeasure with the Federal Reserve’s policies. Today, Trump again spoke against the Fed in a tweet. He said, “Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening.” Trump seemingly advised the Fed to lower interest rates, saying, “We have the potential to go up like a rocket if we did some lowering of rates, like one point, and some quantitative easing.”

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Trump’s latest attack on the Fed comes a few days after the Bureau of Economic Analysis reported last week that the US GDP grew at an annual rate of 3.2% in the quarter ended March 2019. This GDP data was far better than the 2.2% in both the December 2018 and March 2018 quarters.

Interestingly, while the annual GDP growth data reflected a good year-over-year increase, it also was slightly better than the Trump administration’s target of 3.0%.

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Trump versus the Fed

In October, Trump directly blamed Powell for threatening “U.S. economic growth” during an interview with the Wall Street Journal. In December, Trump said, “The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders.”

Yesterday, the S&P 500 Index (SPY) hit an all-time high of 2,949.52. This optimism in the broader market (QQQ)(DJI) could mainly have been driven by investors’ high expectations for the current earnings season, positive first-quarter GDP data, and high hopes for the latest rounds of US-China trade talks.

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