Trump’s new Fed pick says growth slowed ‘in part’ by trade uncertainty

Newly confirmed Federal Reserve board member Stephen Miran attributed weaker first-half economic growth to uncertainty from trade and tax policies, but projects a second-half acceleration due to resolved tax issues and new trade deals. This assessment aligns with the Fed's recent 0.25% interest rate cut, made amidst a 'stagflationary mix' of tariffs and tax cuts, while the legality of Trump's trade policies faces a Supreme Court hearing on November 5.

Analysis

The U.S. economic outlook is characterized by significant policy-driven uncertainty and conflicting signals. Stephen Miran, a new Trump appointee to the Federal Reserve board, has attributed the weaker-than-expected growth in the first half of the year to prior trade and tax policy ambiguity, while forecasting an acceleration in the second half. This optimism is predicated on the extension of tax cuts and the finalization of new trade agreements. However, this perspective is set against a complex backdrop described by the Congressional Budget Office as a 'stagflationary mix,' where the stimulative effects of tax cuts are counteracted by the contractionary and inflationary impact of tariffs. The Federal Reserve's recent 0.25% interest rate cut—its first in months—signals its concern over slowing growth, underscored by a Bureau of Labor Statistics report indicating nearly 1 million fewer jobs were created between March 2024 and March 2025. Compounding this economic uncertainty is a critical legal challenge to the administration's trade policy, with the Supreme Court scheduled to hear arguments on November 5th regarding the President's authority. This legal overhang, coupled with overt political pressure on economic institutions like the Fed and BLS, creates a volatile and unpredictable environment for forecasting.

Key Decisions for Investors

• Investors should mark November 5th as a key date, as the Supreme Court's ruling on the legality of the administration's tariff authority represents a major binary event that could significantly impact trade-sensitive assets.
• Given the 'stagflationary mix' of policy, portfolios should be stress-tested for resilience against both slowing economic growth and persistent, tariff-driven inflation.
• Monitor for signs of growing divergence or alignment between new Fed appointees and the chair, as shifts in the board's internal dynamics could signal future changes in monetary policy direction and predictability.
• Exercise heightened scrutiny of official economic data, particularly labor market reports, due to noted political pressure on statistical agencies, and consider incorporating alternative data sources to validate macroeconomic trends.