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As Trump takes another shot at the Fed, how is the economy faring?

The U.S. economy has created jobs for over 100 consecutive months, and unemployment is near a 50-year low. Still, President Donald Trump is vocal about his belief that the Federal Reserve is holding the economy back from stronger growth. William Brangham talks to David Wessel the Brookings Institution about March jobs numbers, indications economic growth is slowing and Trump's view of the Fed.

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  • Judy Woodruff:

    After a worrisome jobs report in February, the U.S. labor market rebounded last month. The unemployment rate is near a 50-year low, and the U.S. economy has created jobs now for more than eight years, or 100 months-plus straight.

    But President Trump is making it clear that he believes the Federal Reserve is holding the economy back from even stronger growth.

    William Brangham gets a look at the wider picture.

  • William Brangham:

    Job growth is averaging around 180,000 jobs a month for the first quarter of this year. That's a solid number by most measures, but it's also about 20 percent lower than a year ago.

    The president touted the economy's overall performance this morning. But, even as he does that, he's also stepping up his public campaign against the Fed and its chairman, Jay Powell. It should be said that Trump selected Powell for the job.

    Let's dive into all of this with David Wessel. He joins us again from the Brookings Institution, where he heads the Hutchins Center on Fiscal and Monetary Policy.

    David, let's talk a little bit about the jobs numbers first. They seem like pretty good jobs numbers. What is your take on this report?

  • David Wessel:


    It was a big sigh of relief, because the February job numbers were frighteningly poor. This suggests, though, that the economy, while doing well is slowing, manufacturing jobs, fewer of them, temporary help jobs, fewer of them. That's been true for two of the last three months.

    So there are signs that the economy is leveling off, but we still have 3.8 percent unemployment and we still have surprisingly little wage growth, considering how tight the labor market is.

  • William Brangham:

    And, as I mentioned before, the Fed is very much on the president's mind. Yesterday, he said he planned to nominate Herman Cain for the Federal Reserve Board.

    You may remember Cain as the former CEO of Godfather's Pizza who ran for president in 2012 advocating for a flat tax. His bid ended after allegations of sexual harassment came out about him.

    The president says he also so plans to nominate Stephen Moore, who is a well-known conservative commentator and writer who's been a very vocal critic of the Fed.

    President Trump this morning took another shot at the Fed, both for its stance on interest rates and the way it has been shrinking the huge portfolio of bonds that it bought during the financial crisis. That's a policy known as quantitative easing.

  • Donald Trump:

    Well, I personally think the Fed to drop rates. I think they really slowed us down. There's no inflation. I would say, in terms of quantitative tightening, it should actually now be quantitative easing.

    You would see a rocket ship. Despite that, we're doing very well.

  • William Brangham:

    David Wessel, with these two nominees, and with the president's ongoing criticism of the Federal Reserve, it certainly seems he wants to Fed to act more as a partisan actor, rather than its traditional independent role.

  • David Wessel:

    Well, I think what the president is saying is he wants people on the fed who will cut interest rates, because he thinks they should.

    These two men are partisan. And they have both been involved in the partisan fray. Steve Moore is a campaign contributor. The Club for Growth, he organized. Herman Cain, of course, ran for president.

    I think he wants loyalists. He doesn't seem to feel that he needs to respect the political independence of the Fed. He wants people in this job who will do what he wants.

  • William Brangham:

    But, just as a devil's advocate, doesn't every president wants a healthy economy and low unemployment? I mean, how much of a difference does it make if the Fed becomes more partisan?

  • David Wessel:

    I think, in general, presidents want people who are competent, who will do the right thing.

    Yes, they tend to appoint people who are more sympathetic to them. President Obama tended to appoint Democrats, for instance. But I think, in this case, these two men, frankly, aren't serious thinkers. They're much more cable TV talk show commentators on the economy. And I think that risks undermining the credibility of the Fed.

    It's quite a contrast to the president's previous appointments to the Fed, who are people who were quite competent and could have been appointed by any Republican president.

  • William Brangham:

    So do you think those two men will make it onto the Fed? And, longer term, what do you think that does to the Fed's reputation?

  • David Wessel:

    I don't know if they will make it onto the Fed. The president seems determined to nominate them. He announced their names even before they were formerly cleared by the White House background check operation.

    Big question about whether the Senate will go along. So far, the Republicans in the Senate have been willing to accept even unconventional nominees from the president. We will see whether this is one step too far.

    I don't think that they will change policy at the Fed. They will be two voices in the wilderness. The Fed is a very strong institution. And there are people, both the governors appointed by the president and the president of the Federal Reserve banks across the country, 12 of them, who will be a ballast.

    But I do think it threatens to undermine the Fed's credibility as a politically insulated organization of technocrats who do what they think is right for the economy. They sometimes make mistakes, of course, but they're motivated more by the — what's in the interest of the economy, and worry less about what the president wants them to do.

  • William Brangham:

    All right, David Wessel of the Hutchins Center, thank you so much.

  • David Wessel:

    You're welcome.

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