As you think ahead to the people sitting around the Thanksgiving table together, try to picture these two side by side: Donald Trump and Jerome Powell.
It may be more awkward than when you get stuck at the holiday dinner table next to that one cousin who never learned to chew with his mouth closed and constantly makes inappropriate comments.
As Trump gets ready to begin his second term in the White House in January, his relationship with Powell, the chair of the Federal Reserve Board since 2018, could make headlines from time to time.
Powell assumed his position during Trump’s first term. Trump clashed with Powell. Powell doesn’t believe that a president should dictate Fed policy. Trump may not have the same view of the Fed’s independence.
That isn’t the only way the two men may share different views.
“The recent performance of our economy has been remarkably good, by far the best of any major economy in the world,” Powell said during a November 14th speech in Dallas, Texas.
He added, “Looking back, the U.S. economy has weathered a global pandemic and its aftermath and is now back to a good place. The economy has made significant progress toward our dual-mandate goals of maximum employment and stable prices.”
RELATED: Read the transcripts of Jerome Powell’s “Economic Outlook” on November 14th in Dallas, Texas.
Those comments alone stand in sharp contrast to what Trump had been telling American voters for the past four years.
“A lot of people are devastated by this economy,” he said at a campaign rally in Asheville, North Carolina on August 14th. “Our country has become a third world nation … a banana republic in so many ways.”
He blamed the Joe Biden/Kamala Harris administration, while mocking the laugh of Harris, the Democrats’ presidential nominee he defeated in the general election.
“For four years, she has cackled while the economy has burned,” Trump said.
RELATED: U.S. News & World Report has this story about what Donald Trump said that he would do to improve the economy, including how he would pay off the national debt. When he ran for president the first time, he also said that he would pay off the national debt.
Once Trump takes office, we will see how he discusses the strength of the economy, which features relatively low unemployment, a fraction of the previous inflationary pressure, and a stock market that has set dozens of record highs in 2024.
RELATED: The Wall Street Journal broke down how President Joe Biden tried to avoid perceived mistakes that took place when he was vice president under President Barack Obama during the 2008-2009 financial crisis. But Biden may have made his own mistakes that helped to re-elect Donald Trump. Read that story here.
Those trends aside…agricultural producers and consumers overall have dealt with costs that have increased about 20% while Trump was out of office. Borrowing rates were at their highest in decades.
In his upcoming term in office, Trump could introduce a variety of variables into the U.S. economy: higher tariffs, mass deportations of undocumented migrants, steep cuts in federal spending (in an effort led by billionaire Elon Musk and former presidential candidate Vivek Ramaswamy), an extension of the tax cuts from his first term in office, and the elimination of taxes on tips and Social Security benefits.
Powell, whose terms expires in 2026, will have to navigate monetary policy in an economy that could be influenced by the political and policy decisions that Trump makes. But there will also be the influence that Trump may try to demonstrate to push the Fed to take actions that he wants.
During Trump’s first term in office, the president referred to Fed leaders as “boneheads” and the “enemy” at times. Nothing that Trump showed as a second-time candidate would indicate that he will refrain from name-calling and public pressuring to lower interest rates faster than the Fed believes is appropriate.
RELATED: The New York Times looked at the history of Donald Trump and the Federal Reserve Board during his first term as president and what that could mean when he takes office again in 2025. Read that story here.
“Should the economy run hot and inflation flare up again, Powell and his colleagues could decide to tap the brakes on their efforts to lower interest rates. That in turn could infuriate Trump, who lashed out at Fed officials including Powell during his first term in office for not relaxing monetary policy quickly enough,” said a CNBC story about the potential drama between Trump and Powell.
RELATED: This CNBC article explains potential flashpoints in the economy that could trigger Donald Trump to demand responses from the Federal Reserve Board but could make Jerome Powell reluctant to follow those demands.
