"Important and concerning": An economist explains why the Federal Reserve cannot save Trump.
Trump likely hopes that the Federal Reserve will fulfill his wish to lower interest rates when the central bank meets later this month.
Foreman wrote that job growth has significantly fallen short of expectations, averaging 29,000 jobs per month, while the average growth under former President Joe Biden was 82,000 jobs per month between May and August 2024.
The average new job growth during Biden's presidency was 168,000 new jobs per month over the past year. He added that although the Federal Reserve has the ability to take limited steps to correct this situation at its meeting on September 16 - where Foreman estimated a 25 basis point rate cut - it cannot solve the underlying issue.
"The main reason the Federal Reserve cannot solve the problem of the slowing labor market is that its tools can help stimulate demand for labor by encouraging companies to invest and hire more - but the labor issue is more about labor supply.
Specifically, it relates to a noticeable decline in workforce growth due to decreased immigration."
There is no doubt that expectations have changed, and policies should change with them: the Federal Reserve should lower interest rates at its next meeting.
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