Trump vs. Powell: The White House’s Fed fights continue

This week, Donald Trump's fight with Jerome Powell continued, with a White House official first telling Bloomberg News that the president was preparing to fire the Federal Reserve chairman, and then Trump quickly taking the threat back.

Executive director of The Budget Lab at Yale, Martha Gimbel, joins the Everybody's Business podcast to discuss why lawmakers have historically committed to Fed independence.

On the morning of July 16, a White House official told Bloomberg News that President Donald Trump was preparing to fire () Federal Reserve Chairman Jerome Powell. Such a firing would potentially be illegal (as the Supreme Court recently noted ()) and undermine decades of goodwill that Fed policymakers have built up with investors. Trump quickly took the threat back (), while making it clear he might still try to dismiss Powell, ostensibly based on alleged overspending on a renovation of the central bank’s headquarters. On this week’s episode of Everybody’s Business, hosts Stacey Vanek Smith and Max Chafkin are joined by Martha Gimbel, director of the Budget Lab at Yale, to explore what’s at stake.

Though Gimbel says there’s a case to be made that the Fed has been too slow to lower interest rates, she explains that the idea of either firing or bullying Powell into an extreme rate cut would backfire by destabilizing the economy. She says banks would probably raise mortgage rates in the short run rather than lower them if Powell were ousted, due to the uncertainty caused by such an unprecedented move. The other problem is that interest rates aren’t set by Powell, but by a committee—and the committee might react to Powell’s firing by resisting Trump’s directives.

Also on the episode, Bloomberg Businessweek columnist Amanda Mull discusses why travel still hasn’t rebounded from the Covid-19 pandemic. Part of what’s happening has to do with politics: Canadian tourists in particular seem to be staying home in protest of Trump’s provocations. Plus, the pandemic may have permanently changed travel habits, discouraging vacationers from flying and pushing some business travelers to opt for Zoom when they might have previously hopped on a plane.

An underappreciated factor however is that airline travel has simply gotten less comfortable. This also comes back to the pandemic, which pushed carriers to adopt pricing schemes () that allowed leisure travelers to pay for perks while adding new charges for services once provided for free. That’s made the experience for those of us at the back of the plane all the more miserable. On the bright side, the New Yorkers we spoke towhich included New York Mayor Eric Adams, who is having a very bad week ()are nevertheless feeling optimistic.

Finally, we explore the growth of “metaphysical services” by Etsy witches () who cast spells for strangers at a reasonable price. Results certainly aren’t guaranteedand centuries of folklore would suggest that messing with spells is a dangerous gamebut that isn’t slowing down this market.

A smart and fun chat show about all things business. Hosted by award-winning business and economics journalists Max Chafkin (author of The Contrarian: Peter Thiel and Silicon Valley’s Pursuit of Power) and Stacey Vanek Smith (former co-host of NPR’s Planet Money and reporter for Marketplace), Everybody's Business is powered by the unparalleled sources and reporters who bring you Businessweek magazine’s headlines and the stories behind them. The show gives listeners a window into the discussions happening in boardrooms, Zooms and group chats in power centers around the world. From interpreting Fed meetings to the business of wolf cloning, each week Max, Stacey and their friends at Bloomberg Businessweek guide listeners through what really went on during the last week from Wall Street and Main Street. Because what’s happening with money and markets is everybody’s business.

Listen to more episodes

Subscribe to Bloomberg Podcasts

Follow Bloomberg Podcasts on Twitter

Visit our other YouTube channels:

Bloomberg Television

Bloomberg Originals

For coverage on news, markets and more

#Business #News

Trump's Fed fight, Staycations, and Etsy Witches

Everybody's Business