Only 37% of Americans say they trust Jerome Powell to make the right decisions for the economy, according to a Gallup poll. That's all. Just not even forty percent of people.

The Fed Chair, in his second term, just recorded the second-lowest approval rating ever. This isn't just an incident. The only time trust in this position was this low in the past two decades was in 2014, when Janet Yellen was at the helm.

In 2020, Powell scored 58%. Now, most people do not believe what he is saying. The Central Bank is not only facing inflation and unemployment anymore. It faces a public that no longer believes they know what they are doing.

At the Jackson Hole conference, Powell stepped up to deliver his final speech as chair, as the markets were reeling, often calling for rate cuts. But inflation still persists and the Fed does not want to stimulate it. Powell said that "adjustments" may be necessary, which in Fed language is code for: we are about to cut.

The markets are not ready for that. They are waiting for another boring scenario. But they have heard Powell clearly suggest that rate cuts are coming, possibly next month, and maybe again in the two meetings after that.

The dollar fell sharply, bonds rose strongly, and stocks recovered at the end of a difficult week. But there is a hidden risk in that move. The August jobs report won't be released until the first week of September. If hiring bounces back, the Fed will have cut rates into a strong labor market while inflation remains above target.

It would be a mistake, according to analysts at Bank of America, who warn that the Fed "risks a policy mistake if they cut rates" too early.

Meanwhile, right after Powell's speech, Trump targeted Lisa Cook, one of the Fed board members. Wearing the red hat "Trump was right about everything", he told reporters that he would fire her if she did not resign due to allegations about mortgage documents.

Lisa said she would not be "bullied", but that means nothing under this administration. Trump's grudge against Powell is personal, as he has repeatedly called him a "puppet", "an idiot", and "a fool" for not cutting rates sooner and more aggressively.

Now, Powell may finally be cutting, but Trump is not impressed. He appointed Stephen Miran, an ally who previously argued that the president should have the power to fire central bank officials at any time, to a temporary position at the Fed. And Trump replaced the head of the Bureau of Labor Statistics with a supporter.

The Fed's independence is weakened as Trump allies join

The Fed is expected to operate outside of politics. But by the time the next Jackson Hole conference rolls around, there is every reason to believe the Fed will look different. A new chair, approved by Trump, is likely to run it. The question then is: will that chair follow the data, or follow orders?

This is not just a hypothetical concern. Currently, the bond market is warning. Long-term government bonds are performing worse than short-term debt, suggesting investors think the Fed will be pressured to keep rates too low, not because it is good policy, but because it is good politics.

If borrowing remains cheap, Trump can continue to spend big without raising taxes. That's the real game here. Even Powell's last time wasn't alone. He promised to fight inflation "by any means", but also said he was carefully watching the labor market as it could be destroyed quickly.

That is the Fed's consideration; cautious, data-driven, no surprises. But when Powell leaves, that style may disappear. If the next chair tries to oppose or push back, it could signal to investors that something is wrong. Disagreement could be seen as healthy debate or evidence that the chair has lost control. Either way, understanding the Fed will become more difficult, not easier. And the risks will be higher.

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