As warning signs flash across the U.S. economy, pressure is intensifying on Federal Reserve Chair Jerome Powell to reverse course or step aside entirely.
Former National Economic Council Director Larry Kudlow wrote in The New York Sun that Powell's high interest rate policy is not only damaging growth, but also out of touch with economic reality.
"Why is Jerome Powell clinging to his job?" Kudlow wrote, highlighting the chair's refusal to pivot despite deteriorating job figures and falling inflation. "Mr. Powell's tight money is damaging housing, autos, credit cards — you name it."
On Friday, Fed Gov. Adriana Kugler announced her resignation, effective Aug. 8. That opens the door for President Donald Trump to name a replacement, possibly someone he could elevate to chairman with Senate approval. Reports also suggest Vice Chair for Supervision Michael Barr may soon resign, which would give Trump a second opportunity to reshape the Fed's leadership.
Although Powell's term officially runs through 2026, Kudlow and others argue that the administration should act now to install leadership more aligned with Trump's pro-growth, low-rate agenda.
The economic data offers plenty of fodder for critics. The July jobs report revealed 258,000 in downward revisions for May and June. More worryingly, private-sector job gains have averaged just 52,000 per month over the past quarter — less than half the rate economists say is needed to maintain healthy growth. The household survey, a key barometer for small business employment, dropped by 260,000 in July, continuing a three-month trend of decline.
Still, the economic picture is mixed. Wages are rising — average earnings are up more than 5% over the past year, roughly double the inflation rate. Business investment remains strong, thanks in part to full-cost expensing measures in the recently passed "one big beautiful bill." These policies are expected to boost capital expenditures in the coming quarters.
Yet critics say Powell is missing the bigger picture. One of them sits inside the Fed itself. Gov. Christopher Waller issued a rare dissent at last week's Federal Open Market Committee meeting, arguing that inflation is essentially back on target and that the federal funds rate — currently at 4.5% — is at least 1.5 percentage points too high. He also dismissed tariff-related price pressures as temporary.
Kudlow and other conservative economists argue the Fed should have begun cutting rates months ago.
"They should've been lowering in May, June, and again this week," he wrote.
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