Trump’s ‘Golden Age’ Promises Face Fed Reality on Inflation/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The Federal Reserve is pushing back on President Trump’s economic optimism by projecting slower growth, rising inflation, and higher unemployment. Tariff uncertainty and inflation risks have stalled rate cuts despite Trump’s pressure. The Fed may not ease policy until fall, pending economic clarity.
Trump’s ‘Golden Age’ Meets Fed’s Grim Outlook Quick Looks
- Fed projects slower GDP growth, rising unemployment, inflation above target
- Interest rate cuts delayed amid tariff uncertainty and inflation risks
- Trump presses for steep rate cuts, calls Fed inaction “stupid”
- July 9 tariff deadline could trigger further economic shock
- Markets stabilize slightly, but Fed remains cautious moving forward
Trump’s ‘Golden Age’ Promises Face Fed Reality on Inflation
Deep Look
President Donald Trump’s bold proclamation in January that America had entered a “golden age” now faces a sobering reassessment by the Federal Reserve. Far from a booming economy, Fed officials now forecast slower growth, higher inflation, and rising unemployment—casting a shadow over the administration’s promises and policy direction.
The Fed held interest rates steady this week at 4.25% to 4.50% for the fourth consecutive meeting, citing ongoing uncertainty around the administration’s aggressive tariff agenda. These conditions have delayed previously expected rate cuts and reshaped economic projections. In place of a smooth monetary easing, the Fed now sees a more cautious path ahead.
Fed Chair Jerome Powell explained that inflation, expected to ease under prior assumptions, is now projected to rise to 3% by the end of 2025, staying above the 2% target through 2026. Simultaneously, unemployment is expected to climb from 4.2% to 4.5% by year’s end—its highest since 2017, not counting pandemic-era spikes.
This dimming outlook contrasts sharply with Trump’s public insistence that the economy is strong and the Fed should slash interest rates to energize growth. Trump has criticized Powell directly, labeling him “stupid” for not cutting rates more aggressively. He’s also cited recent low inflation readings to justify further easing, pointing to international central banks, like the European Central Bank, that have continued to cut.
But Powell emphasized the Fed’s caution. “We hadn’t expected [the tariffs] to show up much by now, and they haven’t. We’ll see the extent to which they do over coming months,” he said. The central bank wants more clarity before making any moves.
Much of that clarity hinges on July 9. That’s when Trump’s latest round of sweeping tariffs, announced in April on “Liberation Day,” could go into effect unless new trade deals are struck. So far, only a limited agreement with the UK has been finalized. If negotiations with the European Union and other major trading partners fail, the U.S. could impose tariffs of up to 50%—a move analysts say could jolt the economy into recession.
While volatility around trade has eased since May, the Fed is wary. At one point, internal Fed projections described a recession as nearly as likely as continued moderate growth. Though Powell now says business sentiment has improved slightly, uncertainty remains high.
“We’re going to learn a lot more over the summer,” Powell said, hinting that September may be the earliest point for rate policy shifts depending on how the economic data and trade landscape evolve.
Despite Powell’s characterization of the current U.S. economy as “solid,” signs of fragility are building. While layoffs are still low, job creation is stalling. Powell warned that if the job-finding rate remains weak while unemployment rises, the labor market could deteriorate quickly.
The Fed’s latest forecasts reflect this caution. Projected GDP growth has fallen to 1.4%, well below the 2.1% estimate made in December. With inflation grinding higher and job market resilience fading, the central bank is bracing for a slower, more inflationary path than it had hoped just six months ago.
Though Trump continues to tout strength and push for deep rate cuts, the Fed remains grounded in its analysis of what it sees as fiscal volatility and external shocks. Whether the president’s “golden age” vision will align with the hard numbers the Fed is tracking remains to be seen—especially with trade policies still in flux and the summer set to define the trajectory of the U.S. economy.
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