The U.S. economy is flashing serious warning signs, and the Federal Reserve is under increasing pressure to cut interest rates. Fed Chair Jerome Powell is preparing to testify before Congress this week, as tension builds across markets and political lines.


🔹 Economic Warning: LEI Index Drops Again

According to The Conference Board, the U.S. Leading Economic Index (LEI) fell for the sixth consecutive month in May—this time by 0.1%. It is now 16% below its peak, reaching the lowest level in nine years. The current pace of decline has historically been a reliable indicator of an impending recession.

📉 Over the past 39 months, the LEI has declined in 37—one of the worst streaks on record. Every time something similar has occurred since 1960, a recession has followed.


🔹 Powell Under Fire in Congress

Jerome Powell will testify this week before both chambers of Congress. While these hearings are routine, this time the pressure is anything but ordinary. Powell faces criticism from both sides of the aisle—and even from within the Fed itself.


🔹 Trump-Appointed Fed Officials Call for July Rate Cut

Two key Fed members—Michelle Bowman and Christopher Waller, both appointed by former President Trump—have now publicly called for rate cuts starting in July. Bowman presented her case in Prague, while Waller echoed her stance on CNBC.

Economist Mohamed El-Erian noted: “Political influence is beginning to creep into the FOMC.” He added that the synchronized timing of two Republican-leaning governors advocating a July cut is no coincidence.


🔹 Trump Allies Push for Aggressive Cuts, Powell Holds Steady

While Trump and his inner circle want dramatic cuts of up to two percentage points, Powell and Waller favor a more cautious approach. “I want to start slow,” Waller said. Even the Fed’s latest projections suggest a target rate around 3%, only modestly below current levels.

📊 History shows that cutting rates too quickly can backfire. When the Fed slashed rates by 1% last fall, bond yields actually rose—driven by market fears of rekindled inflation.


🔹 Powell Resignation Rumors Swirl

Bill Pulte, head of the Federal Housing Finance Agency, posted on X that “Powell’s immediate resignation is imminent,” claiming Powell shows “clear political bias” against President Trump. Powell has not responded, but unity within the Fed appears increasingly fractured.


🔹 Pressure from the Left, Too

Senator Elizabeth Warren is also calling for lower rates, though for different reasons than the Republicans. Powell is expected to face tough questioning from both sides during his congressional testimony—Republicans demanding action, and Democrats urging urgency.

#Fed , #JeromePowell , #FederalReserve , #USmarket , #worldnews

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