President Donald Trump's erratic policies have hurt the U.S. economy so deeply that they're largely responsible for interrupting the Federal Reserve's efforts to restore monetary policy to normal following the unprecedented actions taken following the financial crisis of 2008, a top Democratic congresswoman said.
U.S. Representative Maxine Waters, the California Democrat who recently took leadership of the House committee overseeing the Federal Reserve, said during a hearing on Wednesday that Trump's unpredictable trade war with China and the recent government shutdown have hurt business and consumer confidence, in turn jeopardizing economic growth.
Gnawing concerns that the U.S. economy might slip into recession sent the S&P 500 into a swoon late last year, in turn pushing the central bank, led by Chairman Jerome Powell, to pause a three-year cycle of interest-rate increases. The Fed usually raises interest rates when the economy is growing to slow down excessive borrowing and thus to prevent runaway inflation, and it typically holds rates constant or cuts them when the economy is slowing or slipping into recession.
Powell also has acknowledged internal Fed discussions over a sooner-than-expected end of efforts to shrink its $4 trillion balance sheet, which more than quadrupled in size following the financial crisis in another form of loosening monetary conditions.
"President Trump's policies are damaging our economy," Waters told Powell. The trade war, she said, is "bringing down consumer and business sentiment," while the president's 2017 tax cuts are a "scam" and a "giveaway" to wealthy Americans and corporations.
The Federal Reserve chairman testifies twice a year before both chambers of Congress, and Wednesday marked the first such hearing since Democrats took control last year of the House of Representatives, and with that the leadership of the House Committee on Financial Services, which oversees not just the Fed and monetary policy but also legislation and regulation of the financial industry.
In her opening questioning period, Waters didn't give Powell a chance to respond.