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Trump says Fed Chair Jerome Powell is destroying the housing market

Trump says Fed Chair Jerome Powell is destroying the housing market

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President Trump has resumed his public criticism of Federal Reserve Chair Jerome Powell, this time targeting what he characterizes as damage to the U.S. housing market. Speaking via Truth Social on Tuesday evening, Trump contended that Powell’s resistance to rate cuts has created an affordability crisis that is preventing potential homebuyers from obtaining mortgages. The statement arrives as recent housing data paints a picture of widespread market strain, with builder confidence hitting levels unseen since late 2022 and developers resorting to aggressive price reductions and incentive packages to attract buyers.

Housing Sentiment Deteriorates Despite Construction Gains

On the surface, last month’s housing construction data showed a modest advance. U.S. housing starts climbed 5.2% to reach an annualized rate of 1.43 million units, marking the strongest performance in five months. Multifamily residential projects drove much of this increase, suggesting continued demand in the apartment and rental sectors.

However, builders’ outlook tells a starkly different story. The National Association of Home Builders/Wells Fargo Housing Market Index dropped to 32 in August, representing the steepest decline since December 2022. This represents a pullback from July’s reading of 33 and fell short of economist expectations for a move higher to 34. The sharp reversal in sentiment underscores mounting concerns about affordability constraints and buyer reluctance.

Affordability continues to be the top challenge for the housing market and buyers are waiting for mortgage rates to drop to move forward.

— Buddy Hughes, NAHB Chairman

Regional breakdowns reveal uneven conditions across the country. Confidence in the Northeast plummeted to its lowest level since January 2023, while the South and Midwest showed no movement. The West registered only marginal improvement. Foot traffic from potential buyers, though slightly elevated compared to May levels, remains subdued overall.

Builders Cut Prices as Demand Weakens

Facing persistent buyer hesitation, homebuilders have begun taking drastic measures. More than one-third of builders reported reducing prices in recent weeks, with the average markdown landing near 5%. This represents a meaningful concession in an industry where margins are already under pressure.

Beyond price cuts, incentive offerings have reached extraordinary levels. Approximately 66% of homebuilding firms are now providing sales incentives—the highest percentage since the pandemic era. These typically include upgrades, closing cost assistance, financing buydowns, and other sweeteners designed to move inventory and close deals.

Key Metric

The NAHB Housing Market Index measures builder sentiment on current conditions and sales expectations. Readings above 50 indicate more builders view conditions as good than poor. The current level of 32 reflects widespread pessimism about near-term market prospects.

Despite these aggressive tactics, buyer interest remains limited. Prospective homeowners appear to be in a holding pattern, waiting for what they perceive as more favorable borrowing conditions before committing to purchase decisions. Builder confidence regarding future sales activity has essentially flatlined, offering little hope for a near-term recovery in demand.

Mortgage Rates Edge Lower but Fall Short of Market Needs

The 30-year fixed-rate mortgage declined to 6.58% last week, marking the lowest level since October and representing a roughly half-percentage-point improvement from the start of the year. In absolute terms, this represents meaningful relief from earlier peaks.

Yet the market response has been muted. Buyers and builders alike appear to view current rates as insufficient to justify moving forward with transactions. Market participants seem to be anticipating further declines before meaningful momentum returns to housing activity.

Context

Mortgage rate movements are influenced by multiple factors, including broader economic conditions, inflation expectations, and Federal Reserve policy decisions. While the Fed doesn’t directly set mortgage rates, its actions on short-term rates influence longer-term borrowing costs.

Robert Dietz, Chief Economist at the NAHB, has emphasized that meaningful improvement in housing market conditions will require sustained movement in mortgage rates. The current trajectory, while directionally positive, appears insufficient to unlock the pent-up demand that builders believe exists among qualified buyers.

Industry-Wide Pressure Mounting Across Construction Sector

The housing market’s deterioration carries significant implications for the broader construction industry and related sectors. Homebuilding represents one of the largest components of U.S. capital investment, accounting for roughly 3-4% of GDP in normal conditions. When builder sentiment collapses, the ripple effects extend far beyond individual construction firms.

Major homebuilders including Lennar Corporation, D.R. Horton, and KB Home have all signaled caution in recent earnings calls, citing persistent affordability headwinds and cautious consumer sentiment. These companies, which collectively employ hundreds of thousands of workers across construction, sales, and administrative functions, face potential workforce reductions if current conditions persist.

The supply chain supporting residential construction also faces pressure. Manufacturers of building materials, appliances, fixtures, and components depend on steady housing production to maintain healthy order books. Lumber mills, cement producers, and specialty contractors have already begun adjusting operations to reflect lower expected housing starts.

Financial institutions holding mortgage portfolios and construction lending facilities similarly face challenges. Banks and mortgage servicers that benefited from refinancing activity in prior years now confront a market where originations remain below historical averages, pressuring fee income and requiring adjusted business strategies.

Broader Economic Implications and Consumer Impact

The housing market’s weakness signals broader concerns about consumer financial health and economic momentum. Residential construction typically leads economic cycles, with housing activity serving as a leading indicator of overall business conditions. Current deterioration suggests underlying economic headwinds that extend beyond the real estate sector itself.

From a household perspective, the affordability crisis represents a fundamental market failure. The combination of elevated home prices and high mortgage rates has priced out millions of potential buyers, particularly first-time homebuyers and younger demographics. This creates long-term consequences for wealth accumulation, as homeownership historically represents the primary wealth-building mechanism for middle-income households.

Rental markets, meanwhile, show divergent dynamics. While single-family rentals remain relatively stable, multifamily construction activity has accelerated in recent years, with developers betting on sustained demand for apartment living. However, oversupply risks are emerging in certain metropolitan markets, potentially pressuring rental rate growth and investor returns.

Policy Tensions and Market Outlook

Trump’s public pressure on Powell reflects a fundamental disagreement over monetary policy timing and necessity. The President contends that inflation has subsided sufficiently to warrant more aggressive rate reductions, while Federal Reserve leadership has emphasized the need for a cautious approach to avoid rekindling price pressures.

This policy tension carries real consequences for housing market participants. Homebuilders face mounting pressure on their balance sheets and operational efficiency as sales remain constrained. Would-be homebuyers confront affordability challenges that have pushed homeownership out of reach for many income brackets. The broader economic impact of sustained housing market weakness extends beyond the construction industry to financial services, retail, and consumer spending patterns.

Federal Reserve communications in coming weeks will prove critical. Market participants scrutinize every statement and economic projection for clues about the pace and magnitude of potential rate adjustments. The consensus among economists expects gradual rate cuts beginning in the fall, but the speed and extent of reductions remain uncertain. A more aggressive cutting cycle could provide meaningful relief to housing demand, while a more cautious approach would likely perpetuate current market constraints.

The coming weeks and months will prove critical in determining whether mortgage rates decline further and whether buyer sentiment begins to shift. Market observers continue to monitor Federal Reserve communications for signals about the pace and magnitude of potential rate cuts. The interaction between monetary policy decisions and housing market conditions will remain a focal point for policymakers, industry participants, and households evaluating major purchasing decisions.

The stakes for prompt policy adjustment appear substantial. Extended weakness in housing construction threatens employment in construction and related industries, constrains household wealth formation, and may signal broader economic softening ahead. Conversely, overly aggressive rate cuts could reignite inflation concerns and necessitate subsequent tightening, creating additional policy uncertainty. The Federal Reserve’s balancing act remains one of the most consequential macroeconomic challenges facing the institution and the nation.

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Treasury Secretary Scott Bessent was the one who stopped Trump from firing Powell

Treasury Secretary Scott Bessent was the one who stopped Trump from firing Powell

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In a shocking turn of events, turns out Treasury Secretary Scott Bessent is the reason Jerome Powell still has a job today. While the White House was stirring chaos over the Federal Reserve chair, Scott stepped in behind the scenes, sat down with Trump, and made one thing clear: firing Powell would be a mess. And not the fun, ratings-friendly kind Trump likes, this one would backfire. Badly.

According to the Journal, Scott privately urged Trump to stay put, arguing that a high-profile showdown with the Fed chair, just ten months before Powell’s term ends, would do more harm than good. He laid out three points.

First, markets were stable, reacting well to Trump’s policies. Second, the Fed was already signaling two possible rate cuts this year. And third, firing Powell could trigger legal hell and a political fight that Trump doesn’t need during an election cycle.

Scott warned Trump about legal risks and GOP pushback

Trump had been toying with the idea of firing Powell for months. His frustration with the Fed was no secret. The president kept complaining that Powell was dragging his feet on interest rate cuts, which Trump believes are needed to reduce federal debt expenses.

But last week, it nearly escalated. A senior White House official told reporters that Trump had privately said he might go ahead and remove Powell. Hours later, Trump walked that back publicly, telling press he wasn’t planning to do so. But by then, the fire had already hit the markets.

Investors got spooked. Even the idea that a president might remove a Fed chair over a policy disagreement was enough to rattle confidence. And Scott knew it. So did Wall Street.

If Powell had been fired, the Fed’s independence would’ve been in serious doubt. The central bank has to make unpopular calls sometimes, and if its leader is seen as replaceable over policy differences, the whole structure begins to crumble.

But Scott didn’t just talk markets. He warned Trump that Powell wouldn’t go quietly. “If you fire him now, he’ll sue,” Bessent told the president, according to one person briefed on the conversation.

The lawsuit could last months, meaning Trump would get no benefit from the decision. Just headlines and headaches. And to be honest, he’s already getting a ton of that on his own anyway.

It doesn’t stop there. Firing Powell could leave the Fed leaderless. The Senate would need to confirm a new chair, but in August, most lawmakers aren’t even in D.C.

And even if they were, several Republican senators already made clear they oppose any attempt to remove Powell early. Senator John Thune told Fox News flat-out: “I think the markets want an independent Federal Reserve.” That kind of pushback could block any replacement Trump nominates.

And don’t forget who takes over if Powell leaves. The vice chair. Right now, that’s Philip Jefferson, a Biden pick and Powell ally. So Trump wouldn’t just lose a fight; he’d hand the keys to someone even less aligned with him. All of this is what Scott hammered home.

Other Trump officials want Powell out over office renovation costs

While Scott played defense, others in Trump’s camp are still looking for a way to push Powell out. Budget director Russell Vought is leading that charge. He’s focused on a $2.5 billion office renovation project that the Fed is overseeing.

The construction is behind schedule and over budget, and Vought is using that as ammo to build a case for “for cause” removal, a legal loophole that could sidestep the normal rules protecting Powell’s position.

As part of that effort, Trump recently placed three of his allies, including someone reporting to Vought, on a D.C. planning commission. That commission approved the Fed’s design plans back in 2021. Now they’re circling back, demanding site visits, and threatening audits.

Vought, when pressed, hasn’t denied that this could be a setup to boot Powell. But he’s been careful with his words, possibly to avoid drawing early legal challenges. Some advisers believe this construction saga could serve as grounds for firing Powell “for cause,” even though recent Supreme Court rulings have made that move harder to pull off.

Meanwhile, the Fed chair succession game has already started. Scott said last week that Trump is likely to get one or two picks early next year. It had seem, at some point, that the Treasury chief wanted the job for himself. But if WSJ’s report is to be believed, it was Scott who saved the global economy.

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Powell defends Fed’s $2.5B headquarters renovation

Powell defends Fed’s $2.5B headquarters renovation

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Federal Reserve Chair Jerome Powell has pushed back against sharp criticism from the White House over the central bank’s $2.5 billion renovation of its historic Washington, D.C., headquarters. 

On Thursday, Powell formally responded to a letter from Russell Vought, director of the White House Office of Management and Budget (OMB), who accused Powell of wasteful spending and mismanagement of the project.

Vought had issued Powell a deadline of seven days to answer a series of questions about the renovation, which had exceeded its original budget. The letter was highly unusual and personal, underscoring increasing tensions between the Federal Reserve and allies of President Donald J. Trump.

But instead of piling on in kind, Powell’s response was measured. He also pointed Vought to a new section of the Federal Reserve’s website, which offers an expanded description of the project, its budgets, schedules, and design choices.

“The Board believes it is of the utmost importance to provide transparency for our decisions and to be accountable to the public,” Powell wrote.

He did not respond to Vought’s political jabs, including accusing Powell of “grossly mismanaging the Fed” or having misled Congress in testimony last month.

Fed denies ‘luxury upgrades’ claims

Among the more sensational claims in Vought’s complaint was the accusation that the renovation had decked out the building with such luxury amenities as private elevators, exclusive dining rooms, and a rooftop garden. Powell strongly denied these claims.

A Federal Reserve official stated that the renovation plans do not include private elevators or VIP lunchrooms. The official also clarified that the roof space would not be used as a garden or for outdoor entertainment, but would house essential mechanical equipment.

Powell said the renovation responds to aging infrastructure and bona fide safety issues. Some buildings from the early 20th century need seismic reinforcements, modern electrical and plumbing systems, and augmented cybersecurity defenses.

He added that the renovation is intended to conform to federal environmental standards and enhance accessibility under the Americans with Disabilities Act.

Powell’s necessary and fiscally prudent spending would guarantee that the headquarters will remain safe, functional, and operational for many years.

He also said that the Federal Reserve is not usually beholden to the National Capital Planning Commission (NCPC) – the entity that reviews major public developments in D.C. However, Powell said the Fed willingly worked with the NCPC to ensure the renovation complied with high design and planning standards.

Trump allies question Powell’s leadership

Even with Powell’s modulated response, the blowback from Trump allies will likely escalate. Vought said Thursday that he plans to visit the office in person to review the project. The building is several blocks from the White House.

That same day, Rep. Anna Paulina Luna (R-FL) said she planned to urge the US Department of Justice to investigate whether Powell had provided false or misleading information to a congressional committee regarding the scope and status of the renovation project.

The criticism is part of a larger bid to undercut Powell’s leadership. Trump, who nominated Powell only to lash out at him later, has often hammered the Fed Chair for monetary policy. Trump has criticized Powell for the US central bank’s refusal to cut rates despite inflation having remained tame.

In his letter, Vought stated that the President had grown increasingly concerned that Powell was unwilling to support his public statements with concrete actions. He also accused Powell of moving forward with an expensive renovation project rather than focusing on the nation’s economic challenges.

On the other hand, Powell made it plain that the renovation is not a luxury but a long-deferred investment in infrastructure that underpins the Fed’s core operations, including monetary policy, financial oversight, and payment systems.

Powell’s reply, however, won’t settle the controversy. It could signal the start of a broader effort to pressure him and steer the Fed in a different direction in the coming months.

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Trump says Scott Bessent won't become Fed chair moments after he said 'I'm happy to do it!'

Trump says Scott Bessent won’t become Fed chair moments after he said ‘I’m happy to do it!’

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Trump just made it clear: Scott Bessent is not going to be the next Federal Reserve chair. This came only hours after Scott himself said he’d be “happy to do it” if asked.

The timing was insane. One moment, the Treasury Secretary was on Bloomberg TV talking like a front-runner. The next, Trump shut it down in front of reporters, saying Scott isn’t at the top of his list. His reason? “Because I like the job he’s doing.”

The blunt rejection also came after Scott had already confirmed that a “formal process” had begun to find a Jerome Powell replacement. Scott even admitted he’s part of that process and said, “It’s President Trump’s decision, and it will move at his speed.” Well, it did.

Scott reacts, but Trump drags Powell instead

Earlier that same day, Scott had taken shots at Powell in that Bloomberg interview. He said Powell should step down from the Fed entirely when his chair term ends in May 2026. Scott argued that keeping Powell around past that date would send the wrong signal.

“There’s been a lot of talk of a shadow Fed chair causing confusion,” Scott said. “And I can tell you, I think it’d be very confusing for the market for a former Fed chair to stay on also.”

Scott was making a clear pitch for a clean break, pushing the idea that the next Fed chair should start fresh, with no Powell hanging around to cloud the waters. It’s worth noting that Powell’s term as a Fed governor doesn’t end until January 2028. That gives him the legal option to stay at the central bank for almost two full years after stepping down as chair, nearly till the end of Trump’s term.

But Trump isn’t even waiting that long. He’s pissed about the whole renovation saga at the Federal Reserve’s headquarters. “I think he’s a total stiff,” Trump told reporters about Powell. “But the one thing I didn’t see him as is the guy that needed a palace to live in.” He also called the cost overruns “pretty disgraceful,” hinting it could be a fireable offense.

Powell’s side of the story says the media reports were inaccurate. This week, he even requested the bank’s Inspector General to investigate the matter. Doesn’t seem to matter. Trump’s already decided Powell doesn’t belong in that seat anymore. He’s said before that Powell keeps rates too high. And he’s made it very clear he wants someone who’s ready to slash them.

Kevin Hassett and Kevin Warsh lead the race

With Scott now pushed to the side, Trump’s pick seems to be leaning toward Kevin Hassett or Kevin Warsh. Reports say the two are front-runners in what one White House insider called an “Apprentice-style” contest. Yes, that’s real.

Apparently, Trump is running this whole thing like a reality show. Scott is advising on the selection, but it’s obvious now that his name’s been scratched off the list unless everyone else fails.

Hassett, who heads the National Economic Council, has been in Trump’s orbit for a while now. He used to be seen as a moderate economist with a neutral political stance, but that’s so over now.

These days, he is a full-blown MAGA mouthpiece. He goes on TV echoing all of Trump’s views, whether it’s on inflation, interest rates, or tariffs.

He also hasn’t been shy about attacking Powell either. Just this month on Fox Business, he slammed the Fed for lowering rates before last year’s election and then holding them steady because of tariff-driven inflation risks. “I think that that raises the specter that they’re not being non-partisan, they’re not being independent,” Hassett said.

Warsh, on the other hand, has kept a lower profile but is still a serious name in the mix. He’s a former Fed governor, and Trump is reportedly impressed with him. He’s not out there doing interviews, but insiders say his name keeps coming up. Still, it’s Hassett who’s making the most noise.

Scott did say that there are “a lot of great candidates,” but now it’s obvious he’s not one of them. That “I’ll do it if asked” moment is now just another quote in the press cycle. Trump slammed the door right after he cracked it open.

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Trump’s early Fed chair pick talk rattles dollar markets

Trump’s early Fed chair pick talk rattles dollar markets

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The dollar lost ground fast on Thursday after The Wall Street Journal reported that Trump might reveal his next Federal Reserve chair pick much earlier than expected.

Traders responded immediately in Asia as the US currency dropped against all its major peers. The news came after Trump said he’s unhappy with how current Fed Chair Jerome Powell has handled interest rates, believing he’s been too slow to cut them.

Trump’s early Fed chair pick talk rattles dollar markets
Source: Bloomberg

Trump is now considering making an announcement as early as September or October, while Powell’s term doesn’t end until May 2026.

According to the Journal, the names being floated inside the White House include Kevin Warsh, a former Fed governor, and Kevin Hassett, the director of the National Economic Council.

Both men have had previous ties to Trump’s circle, and the idea of naming a successor so early is already shaking investor confidence. Trump told reporters Wednesday he’s currently considering “three or four” potential replacements.

He’s openly criticized Powell’s recent decision to keep interest rates on hold, saying it’s keeping government borrowing costs high and hurting growth. Earlier this month, he said new names would be coming “very soon.”

White House sends mixed signals

Rodrigo Catril, strategist at National Australia Bank in Sydney, said Trump’s possible early announcement could “amp up the pressure” on Powell long before his term ends. “We could have a shadow Fed chair before May next year,” Catril said, adding that this kind of political pressure could push the dollar lower in coming weeks.

When asked about Trump’s intentions, the White House responded by saying the Fed should focus on growth-oriented monetary policy. Powell, for his part, insisted politics wouldn’t influence the Fed’s choices. 

“If we make a mistake here, people will pay…the cost for a long time,” Powell told lawmakers during a Senate hearing. He added that rate cuts are still possible later this year, but said the Fed would take a “careful approach.”

On the timeline, Larry Bessent, current Treasury Secretary, previously said interviews for the next chair wouldn’t begin until September. But that schedule might not hold. The Fed’s independence has been guarded since the 1970s, when President Nixon pressured the central bank for lower rates ahead of his reelection. That led to disastrous inflation that took years to fix.

Trump eyes Warsh, Bessent, and Malpass for top role

Trump has had Warsh on his radar for a while. He spoke with him earlier this year about possibly replacing Powell before his term ends. Warsh was also interviewed by Trump last fall for the Treasury job.

At a closed-door event in Boston this month, Warsh told a group of finance professionals, “I wouldn’t be shocked if the president made a nomination sooner than would be customary, just to…try to make a lame duck lamer or something like that.”

Still, there are concerns. Some of Trump’s aides worry Warsh could be a maverick. He’s long been seen as a policy hawk, more focused on fighting inflation than boosting employment.

When asked about that label in Boston, Warsh said, “My fatal flaw is I say what I believe. If the president wants someone who is weak, I don’t think I’m going to get the job.” He also took a shot at zero interest rates: “When things are free, when rates are zero, that leads to very bad economic outcomes.”

Warsh also praised Kazuo Ueda, head of the Bank of Japan, saying he’s “the most talented central banker on the planet right now.”

Then there’s Hassett, who’s reportedly told people he’s not interested in taking the job. That makes room for Bessent. Despite saying he’s committed to his current position, people familiar with both him and Trump say Bessent hasn’t ruled it out.

Speaking before Congress earlier this month, Bessent said, “I’m happy to do what President Trump wants me to do.” That loyalty matters—Trump barely knew Powell when he picked him in 2018 and now sees that decision as a mistake. He’s determined not to repeat it.

Trump has also been talking to aides about David Malpass, who ran the World Bank during his first term. Malpass has recently supported rate cuts and criticized the Fed’s internal models in a Journal op-ed. Those views line up with Trump’s. But in recent private dinners and lunches, Trump reportedly raised doubts over Malpass’s TV appeal, suggesting his appearance might not suit the role.

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