Economists say Trump's criticism of Jay Powell misrepresents Fed's role, influence

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Nov. 30, 2018 / 5:46 PM GMT

By Martha C. White

President Donald Trump leveled criticism against Federal Reserve Chairman Jerome “Jay” Powell in a Washington Post interview when asked this week about the recent streak of stock market losses and the prospect of a recession. Economists say this is, at best, a mischaracterization and, at worst, a deflection of the damage Trump’s own worst impulses have inflicted on the market.

“I’m not happy with the Fed. So far, I’m not even a little bit happy with my selection of Jay,” Trump told the Post. “I think the Fed is a much bigger problem than China.”

In reality, the Federal Reserve’s relationship with the stock market is more nuanced than this criticism would indicate, and economists say Trump’s complaints about Powell represent a flawed understanding of how the economy works.

“They’re not targeting financial markets and specific companies when they’re making decisions,” said Lindsey Piegza, chief economist and managing director at Stifel Fixed Income.

While Trump characterized the Fed as a “bigger problem” than China, economists say the president’s own unpredictable and sometimes bellicose approach to America’s trading partners is one of the worries that has sent investors fleeing in recent weeks.

Tariffs

“There’s definitely a lot of angst in the market around trade and tariffs — companies needing to alter their sourcing alter their supply lines, alter who and how they sell products across countries — the uncertainty of that is definitely weighing on the markets,” said Brian Rehling, co-head of global fixed income strategy at the Wells Fargo Investment Institute. “That probably continues to be one of the bigger factors driving

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