Fact Check: "Federal Reserve Chair Jerome Powell's decisions cost the country $400 billion per year."
What We Know
The claim that Federal Reserve Chair Jerome Powell's decisions are costing the country $400 billion annually has been voiced by several Republican senators, notably Senator Bernie Moreno (R-Ohio). In a letter to Powell, Moreno stated, "Your choice not to lower interest rates despite the Trump Administration's economic progress is costing our country $400 billion per year" (Axios). This assertion aligns with former President Donald Trump's comments, where he suggested that Powell's stance on interest rates could be costing the U.S. as much as $1.08 trillion a year, or approximately $360 billion for every percentage point above a "normal" rate (Stocktwits).
The context of these claims revolves around the Federal Reserve's monetary policy, particularly its interest rate decisions, which have significant implications for borrowing costs, consumer spending, and overall economic growth. High-interest rates can lead to decreased investment and spending, potentially stifling economic expansion (County Local News).
Analysis
The assertion that Powell's decisions cost the country $400 billion annually is rooted in political rhetoric rather than concrete economic analysis. While it is true that high-interest rates can negatively impact economic activity, quantifying the exact cost to the economy is complex and often speculative.
Senator Moreno's claim reflects a broader sentiment among some GOP members who believe that the Federal Reserve has been slow to respond to economic conditions under Powell's leadership. However, Powell has defended the Fed's approach, indicating that external factors, such as tariffs imposed by the Trump administration, have influenced the Fed's decisions on interest rates (MSN). This suggests that the blame for economic impacts may not rest solely on Powell's policies but also on broader economic conditions and decisions made by the previous administration.
Moreover, while Trump's claims of $360 billion to $1.08 trillion in costs are alarming, they lack detailed empirical support. The figures appear to be based on estimates of refinancing costs and the broader economic impact of interest rates, which can vary widely depending on numerous factors, including consumer behavior and global economic conditions (Epoch Times).
The reliability of the sources making these claims varies. While Axios and Stocktwits provide direct quotes and context from credible political figures, the interpretations of economic impact are often subjective and politically charged.
Conclusion
The claim that Jerome Powell's decisions cost the country $400 billion per year is Partially True. While there is a basis for asserting that high-interest rates can have significant economic costs, the specific figure of $400 billion is not universally accepted and lacks comprehensive empirical backing. The assertion reflects a political perspective rather than a definitive economic analysis, highlighting the complexities of attributing economic outcomes to specific policy decisions.
