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Is Trump threatening to sabotage the economy to force Fed rate cuts · DEEP INSIGHT

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  Speaker 1: Tonight, two months from the midterms, Donald Trump got a
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  Speaker 1: desperately needed rebound. But is he throwing away the win?
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  Speaker 1: The U.S. labor market added 162,000 jobs in August. That's
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  Speaker 1: the strongest number since March and more than double what
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  Speaker 1: economists had expected. The job gains snap a months-long stretch
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  Speaker 1: of poor job growth. And August also marked the first
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  Speaker 1: increase in the labor force participation rate in eight months. Now,
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  Speaker 1: the report wasn't all good news as wage growth slowed again,
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  Speaker 1: landing at a five-year low. It's also the fourth month
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  Speaker 1: in a row that Americans' pay gains were outpaced by inflation.
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  Speaker 1: And to make matters worse, just minutes after this report
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  Speaker 1: was released, the president threatened to stop the U.S. from
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  Speaker 1: trading with top partners unless the Federal Reserve lowers interest
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  Speaker 1: rates at its upcoming meeting. Quote, lower the rate or
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  Speaker 1: I'll stop trading with countries with which we have a
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  Speaker 1: trade deficit. Trump said in a post on Truth Social.
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  Speaker 1: It's better than tariffs. The Fed board, with its new
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  Speaker 1: great leader, must get smart, be patriots for a change. Natasha,
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  Speaker 1: this is a good jobs report for the president, particularly
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  Speaker 1: since it signals that for this year, job growth is
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  Speaker 1: better than last year. But then he steps on it
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  Speaker 1: by posting something that frankly is pretty economically illiterate, and
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  Speaker 1: doesn't demonstrate an understanding of how the economy works.
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  Speaker 2: Indeed, I can't really explain it to you. He threatened
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  Speaker 2: the Federal Reserve with tariffs on other countries. I've never
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  Speaker 2: heard such a thing. And by the way, it is
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  Speaker 2: just the case that a Federal Reserve that's looking at
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  Speaker 2: the nature of the economy right now and watching a
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  Speaker 2: job market that is doing very well, that is quite
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  Speaker 2: strong where unemployment is in the low fours and is
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  Speaker 2: seeing inflation that has not been anywhere near expectations since
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  Speaker 2: the post-pandemic period is obviously looking at this and seeing
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  Speaker 2: that it needs to think seriously about increasing interest rates,
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  Speaker 2: definitely not decreasing them. And that's what the market's expecting.
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  Speaker 2: The Odds of a rate increase at the next Fed
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  Speaker 2: meeting have increased pretty substantially from around under 50% to
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  Speaker 2: over 60% as a result of this jobs print. So
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  Speaker 2: I genuinely cannot, as an economist, articulate to you what
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  Speaker 2: the president's thinking.
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  Speaker 1: What is the president thinking?
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  Speaker 3: Well, number one, I think this is a continuation of
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  Speaker 3: his long-held belief that rates have been too high for
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  Speaker 3: too long. And I think when you tweet or post
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  Speaker 3: at the Fed, you're working the refs. And he's hoping...
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  Speaker 3: that they follow his lead on this. Of course, they
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  Speaker 3: don't have to, an independent board, but this is not new.
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  Speaker 3: He's wanted the rates lowered for a very long time.
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  Speaker 3: He thinks it's holding back the U.S.
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  Speaker 2: Economy.
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  Speaker 3: I don't know what they're going to do. I think
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  Speaker 3: you could make a case, and some are already doing it,
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  Speaker 3: that the economy is running hot, and they need to
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  Speaker 3: pay attention to that on the inflation side. I do
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  Speaker 3: think the jobs report for him today, I agree with
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  Speaker 3: your assessment, it's a great report for him. 162,000 jobs
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  Speaker 3: blew away the forecaster's estimates, and they revised the last
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  Speaker 3: two months upward by 55,000 jobs. There was also a
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  Speaker 3: bounce in manufacturing activity, and we've seen a several months
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  Speaker 3: long increase in the manufacturing index. So there is some
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  Speaker 3: evidence that this economy is resilient, that it has momentum,
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  Speaker 3: and it is tied to the policies of this president.
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  Speaker 3: And that is something, if they choose to focus on
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  Speaker 3: it and the Republicans choose to focus on it, can
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  Speaker 3: work in the midterm.
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  Speaker 4: Well, I want to go back to what you said
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  Speaker 4: about using tariffs as a threat to the Fed. For
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  Speaker 4: someone who has been talking about tariffs in a very
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  Speaker 4: positive way, for a decade or more, this is kind
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  Speaker 4: of his first acknowledgement that tariffs might be bad.
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  Speaker 2: Yeah, some good news in that tweet truth circle.
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  Speaker 4: And to say, hey, I'm going to do something really,
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  Speaker 4: really bad. It's better than tariffs. I'm going to do
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  Speaker 4: something that I want.
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  Speaker 1: My head is spinning already. Right? I am not like,
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  Speaker 1: what's going on? Yeah, to your point. I mean, I
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  Speaker 1: thought he said that tariffs were actually supposed to help us.
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  Speaker 1: So why is it a threat?
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  Speaker 4: Well, it's only a threat, I guess, if the Fed
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  Speaker 4: does what he wants. But to Scott's point, he has
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  Speaker 4: been long fixated on interest rates. In his mind, it's
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  Speaker 4: strength and weakness. Lower rates, in his mind, mean you're
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  Speaker 4: a stronger country. But what comes with lower rates is
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  Speaker 4: potentially higher inflation. And that's what the Fed has to balance.
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  Speaker 4: He on this is an absolutist. He sees it very clearly.
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  Speaker 4: But the Fed, part of their mandate is to ensure
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  Speaker 4: that prices don't go up any higher than they're going up.
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  Speaker 4: And I don't think he appreciates.
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  Speaker 1: The struggle that they face. I mean, can you just
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  Speaker 1: acknowledge that the president doesn't seem to understand how economics works?
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  Speaker 1: I mean, you said he doesn't appreciate it. He doesn't
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  Speaker 1: seem like he actually even understands it.
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  Speaker 4: Well, there's a split when it comes to trade deficits,
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  Speaker 4: when it comes to the interest rate. Not everybody universally
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  Speaker 4: believes the same thing.
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  Speaker 1: Yeah, but it's common sense that if the Fed is
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  Speaker 1: trying to battle inflation, which is still high, that's a fact,
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  Speaker 1: why would they lower rates when the job market is
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  Speaker 1: running hot? That doesn't make any sense.
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  Speaker 2: And by the way, it's actually quite confusing because the
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  Speaker 2: president wants to see mortgage rates come down, right? But
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  Speaker 2: the nature of the Federal Reserve doesn't control your mortgage rate.
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  Speaker 2: It controls this intra-bank lending rate. What's going to happen
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  Speaker 2: if the Fed decided to cut rates at its next meeting?
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  Speaker 2: is actually long-term rates are going to continue to go
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  Speaker 2: up because of an expectation and understanding that as inflation
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  Speaker 2: continues to tick up, and if there's a Federal Reserve
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  Speaker 2: that is incredibly committed to fighting it, then you're going
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  Speaker 2: to be in a situation where you're in a risky environment.
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  Speaker 3: But if you did cut rates, just as a question,
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  Speaker 3: it would spur economic investment, would it not?
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  Speaker 2: So the thing about it, Scott, is actually no, because
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  Speaker 2: the situation is going.
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  Speaker 1: To be that.
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  Speaker 3: If it costs less to borrow?
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  Speaker 2: No, no, very, very clear to articulate. We are in
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  Speaker 2: a situation where the administration is putting direct pressure on
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  Speaker 2: the Federal Reserve and trying to circumvent central bank independence.
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  Speaker 2: We've actually experimented with that in the United States before.
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  Speaker 2: In the Nixon administration, Arthur Burns said, I'm going to
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  Speaker 2: do everything I can to help you get reelected, and
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  Speaker 2: I'm going to cut interest rates. And the result of
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  Speaker 2: that was inflation over two years, going from 3% to
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  Speaker 2: 13% and growth slowing. And the same thing will happen
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  Speaker 2: here if Chair Warsh, which I hope he won't do
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  Speaker 2: and has given every indication that he won't, actually falls
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  Speaker 2: sway to these political pressures.
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  Speaker 5: I just want to jump in real quick because I
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  Speaker 5: think this conversation is predicated on the idea that the
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  Speaker 5: jobs report is actually right. And I'm, not to be
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  Speaker 5: a wet blanket, not convinced because they fired the head
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  Speaker 5: of the Bureau of Labor.
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  Speaker 4: Because it's good news?
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  Speaker 3: No, no, no.
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  Speaker 5: It's not because it's good news.
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  Speaker 4: Are you saying it's fake news?
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  Speaker 5: Well, I mean, you're the master of fake news.
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  Speaker 4: I don't think.
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  Speaker 1: Justin Wolford, who I really respect as an economist, voice
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  Speaker 1: on a lot of things, and he is no dove
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  Speaker 1: about criticizing this president. He posted today in anticipation of
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  Speaker 1: what you just said, that he does not believe that
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  Speaker 1: there is any funny business with this jobs report.
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  Speaker 5: So I have a hard time.
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  Speaker 1: And I will say, the reason I'm going to say
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  Speaker 1: that is because we've talked about messing around with job
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  Speaker 1: numbers before, but people need to understand that revisions are normal.
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  Speaker 1: that changes month to month are normal. None of that
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  Speaker 1: is a sign that there's anything bad or nefarious going on,
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  Speaker 1: and we don't have any evidence of that. The one
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  Speaker 1: thing I will say is the accuracy of the job
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  Speaker 1: numbers has been challenged by survey response rates. That's a
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  Speaker 1: real thing, but that's different from somebody who's going in
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  Speaker 1: and tweaking with the leverage.
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  Speaker 5: I want to say this, which is when the ADP
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  Speaker 5: report from yesterday was a lot more dire than this
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  Speaker 5: one was, showed 17,000 manufacturing jobs were lost, And I
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  Speaker 5: do bring in the credibility of the Trump administration here.
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  Speaker 5: They fired the head of the Bureau of Labor Statistics
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  Speaker 5: last year because they didn't like the numbers. They were
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  Speaker 5: pretty honest about that. They've been caught lying about the
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  Speaker 5: number of U.S. servicemen and women who have died or
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  Speaker 5: been hurt in the middle of this illegal war in Iran.
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  Speaker 5: Donald Trump lies about a lot, and it wouldn't be
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  Speaker 5: beneath them to do something like this. So Two months
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  Speaker 5: before an election, suddenly the job market is hot. And
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  Speaker 5: here's the other problem, too, is what's the value of
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  Speaker 5: creating 162,000 jobs in a month if you need to
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  Speaker 5: have two or three of those jobs to be able
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  Speaker 5: to afford your grocery bill?
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  Speaker 2: I really do want to sort of echo what Abby
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  Speaker 2: is saying and what Justin said. There's no evidence of
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  Speaker 2: any sort that there's any tampering with this jobs report.
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  Speaker 2: And in reality, I agree, it's great news for the
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  Speaker 2: labor market. But what you saw is the stock market
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  Speaker 2: actually reacted negatively to this positive report because of its
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  Speaker 2: understanding that what you're likely to see is an increase
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  Speaker 2: in interest rates as a result of it. So I
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  Speaker 2: don't even think that and I think that's why you
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  Speaker 2: saw the president's true social post. I don't even think
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  Speaker 2: that this positive jobs report is uniformly good news from
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  Speaker 2: the administration's perspective. But I really do not think that
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  Speaker 2: we should question the credibility of the data.