Who Knows More About The Economy, The Fed Or Trump? Trump Takes On Fed Economic Projections

President Trump on Thursday lashed out at the Federal Reserve, rejecting the central bank’s assessment of the economy and predictions it will take years to recover from the economic damage wrought by the coronavirus pandemic.

Trump’s comments came as the U.S. stock indexes plunged on rising coronavirus case numbers across the country as states struggle to reopen their economies. The Dow Jones Industrial Average Thursday was off about 1,500 points, more than 5%, in early afternoon trading.

Trump said the Fed is wrong in predicting unemployment will remain high through 2022 and that millions of jobs may never return.

“I see the numbers also, and do MUCH better than they do,” Trump tweeted.

“One of the biggest problems with President Trump is that he consistently trumpets stock market gains and infers that they are a proxy for the economy. The reason may be that the market gives an assessment of stock valuation daily while economic conditions are much more nuanced and difficult to gauge,” Robert Johnson, professor of finance at Heider College of Business at Creighton University, told IBTimes.

The Fed predicted Wednesday the gross domestic product for 2020 will contract 6.5% and the economy will expand modestly in 2021 and 2022.

Trump had been highly critical of the Fed before the coronavirus pandemic hit, demanding interest rates be lowered below zero to goose the economy, and calling the governors cowards for refusing to take his advice. The Fed, however, fears negative interest rates could do more damage in the long run than a sluggish economy. Interest rates currently are near zero, and the Fed Wednesday pledged to keep them steady unless conditions warrant changes.

Fed Chairman Jerome Powell also warned new outbreaks of coronavirus could prove a drag on the economy.

A panel assembled last week by the Economic Policy Institute urged Congress to pass at least $1 trillion more in economic stimulus or risk 5.3 million jobs. The panel urged lawmakers to provide aid to state and local governments, which are facing massive budget deficits as a result of lost revenue resulting from the pandemic.