Jerome Powell Faces Tripled Pressure as Jobs Slow, Markets, and Trump Push for Rate Cuts

Federal Reserve Chair Jerome Powell faces mounting pressure to implement rate cuts following a weaker-than-expected August jobs report. The U.S. economy added only 22,000 jobs in August, significantly below the projected 75,000, while the unemployment rate rose to 4.3% from 4.2% in July [1]. This marks the third consecutive month of slowing job growth, with June's data revised to a negative figure of -13,000 [2]. Market expectations for a rate cut have solidified, with investors now assigning a 99% probability of a reduction at the Fed’s September 16–17 policy meeting [2]. Powell previously indicated openness to rate cuts in a speech at Jackson Hole, citing a shift in the balance of risks [2].

Political leaders, including President Donald Trump and his administration, have intensified criticism of Powell, accusing him of delaying necessary action to support the economy. Trump labeled Powell as "Too Late," arguing that the Fed's prolonged high-rate environment is harming economic growth [1]. Labor Secretary Lori Chavez-DeRemer echoed these sentiments, stating that Powell has "not done his job" and urging immediate interest rate reductions to stimulate hiring and business investment [1]. Treasury Secretary Scott Bessent also criticized the Fed in a Wall Street Journal op-ed, highlighting concerns about the central bank’s independence and its ability to manage the economy effectively [1].

Analysts argue that while the Fed's efforts to curb inflation have been successful, there are concerns about the potential for an economic contraction if monetary policy remains too tight. Employco USA President Rob Wilson suggested that maintaining high interest rates could shift the economy from a controlled slowdown to an excessive contraction [1]. EY chief economist Greg Daco emphasized that the focus now lies on the scale and future trajectory of rate cuts, noting that the real challenge lies in the Fed's decisions for the remainder of 2025 and into 2026 [2].

The White House has consistently pushed for a more accommodative monetary policy to support economic activity. Chavez-DeRemer highlighted that businesses are investing trillions in the economy, but cheaper borrowing for American businesses is essential to drive private-sector job growth [2]. She also pointed to the administration’s efforts to reduce the federal workforce and boost private-sector employment [1]. Despite these efforts, the slow pace of job creation has sparked renewed calls for the Fed to act decisively.

Market observers remain split on the extent and pace of future rate cuts. UBS Global Wealth Management’s head of taxable fixed-income strategy, Leslie Falconio, noted that the question is no longer whether a cut will occur but whether it will be a "dovish" or "hawkish" move and how Powell frames future policy steps [2]. This uncertainty underscores the delicate balance the Fed must maintain between inflation control and supporting economic growth. As the central bank prepares for its next meeting, the pressure to deliver a timely and appropriately sized rate cut continues to grow.

Source:

[1] Fox Business - Trump Cabinet Members Target Jerome Powell Over Weak Economy and August Jobs Numbers (https://www.foxbusiness.com/media/trump-cabinet-members-target-jerome-powell-weak-economy-august-jobs-numbers)

[2] Yahoo Finance - Jobs Slowdown Seals Fed Rate Cut as White House Criticizes Powell for Not Acting Sooner (https://finance.yahoo.com/news/jobs-slowdown-seals-fed-rate-cut-as-white-house-criticizes-powell-for-not-acting-sooner-150805909.html)