Trump launches fresh attack on Fed as jobs data disappoints
US president Donald Trump has launched a fresh attack on Federal Reserve chair Jay Powell as the latest data paints a gloomy picture of the health of the world’s largest economy.
Writing on his social media platform Truth Social, Trump said that Powell was “unbelievable,” after May data revealed the worst ADP jobs numbers in over two years, and he called on the Fed chair to slash interest rates. ADP chief economist Nela Richardson said: “After a strong start to the year, hiring is losing momentum.”
Trump is eager for the US central bank to begin cutting interest rates to boost the country’s growth figures, forecasts for which have been downgraded by analysts across the board.
The president said “Powell must now lower the rate….Europe has lowered nine times.”
Trump has previously referred to Powell as a “major loser”, but the Fed chair has repeatedly pushed back against his demands, stating that “the path of policy will depend entirely on incoming economic information”.
Last month, the Fed stayed in ‘wait-and-see’ mode and kept rates on hold, though markets are widely expecting a cut from the central bank later this month.
The private sector added 37,000 jobs last month, the smallest gain since March 2023 and well short of forecasts of an increase of 110,000.
The President’s attack on the central bank chief came just before the latest ISM Services PMI data showed a contraction in the services sector for only the fourth time in the last five years.
The number of new orders also sank, while an index of prices rose to its highest level since November 2022.
Steve Miller of ISM said: “Respondents continued to report difficulty in forecasting and planning due to longer-term tariff uncertainty and frequently cited efforts to delay or minimise ordering until impacts become clearer.”
Trump and the TACO trade
Trump’s outburst came as traders are increasingly relying on their new favourite acronym to play the market: TACO, or Trump Always Chickens Out.
Despite significant spikes in volatility and constantly changing trade policy, markets are now reacting to bad news less severely than previously, thanks to expectations that the president will eventually end up backing down.
“Traders are seizing the opportunity to buy at lower prices following new tariff announcements and then selling once Trump retracts or delays the tariffs,” said Jochen Stanzl, chief market analyst at CMC Markets.
Threats of astronomically high tariffs on both China and the European Union from Trump were abandoned in a matter of weeks or days.
On Wednesday morning, Trump doubled tariffs on steel and aluminium imports, except for the UK, but the S&P 500 increased throughout the day.
Trump was even confronted by a journalist with the phrase in the Oval Office last week, stating that the term was one of the “nastiest” he’s ever heard.