"In an interview with CNBC on Thursday, Moody's Analytics chief economist Mark Zandi said recent job numbers have been so dismal that it's possible the U.S. may already be in a recession. "I think the Federal Reserve desperately wants to avoid that kind of outcome," he added. "Obviously nobody wants a recession. But also in the context of Fed independence, they really don't want to get blamed for going into a downturn because that would impair their ability.""
"If the economy stumbles with Powell still at the helm, then Trump can point to him as the "perfect scapegoat" and ask Congress to give the White House more power over the Fed. "That is a threat. Don't forget, our Federal Reserve is not at all a part of our Constitution. It's a creature of the U.S. Congress, created by the Federal Reserve Act 1913. All its powers devolve from Congress," Siegel explained."
Recent job data are weak enough that the U.S. may already be in a recession. The Federal Reserve seeks to avoid a downturn to protect its policy effectiveness and institutional independence. Political leaders could use an economic stumble to blame Fed leadership and push Congress to transfer powers toward the White House. The Federal Reserve's authority stems from the Federal Reserve Act of 1913, and Congress can amend or rescind those powers. The appointment of Stephen Miran to the Fed while he retains a White House role and prior calls to weaken independence raises concerns. JPMorgan warned this appointment could fuel efforts to alter U.S. monetary and regulatory authority.
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