WASHINGTON — A stronger-than-expected August Trump jobs report delivered an unexpected political twist Friday, as the president used the upbeat hiring news to vent about inflation, interest rates and market reaction.
The August data showed employers added 162,000 positions after months of tepid hiring that had stirred concerns about inflation and weighed on the administration ahead of elections two months away. Speaking from the Oval Office, the president criticized financial markets, the Federal Reserve and U.S. trading partners, rejecting conventional economic views that job gains could add to price pressures.
“Success does not cause inflation. Stupidity causes inflation,” he said, calling it “crazy” that stocks fell on inflation worries even after the positive report.
Through his second term, softer hiring alongside elevated prices has complicated his pledge to quickly deliver historic growth. At an August 2024 rally in North Carolina, he promised, “When I win the election, we will immediately begin a brand new Trump economic boom.” So far, the economy has expanded around 2% annually, trailing the pace seen during the prior administration.
The president blamed higher interest costs on U.S. government debt for limiting growth and floated retaliatory trade measures on social media. Rates have climbed amid persistent inflation, which analysts tie in part to tariffs and oil supply disruptions linked to the Iran war. The national debt has surpassed $40 trillion, and the 10-year U.S. Treasury yield rose to 4.79% on Friday.
As faster growth remains elusive, polls show public confidence in the administration’s economic stewardship has slipped. Some economists say the White House’s own policies have contributed to inflation and higher borrowing costs it now decries.
“The administration’s credibility on growth, inflation, rates, debt and deficit dynamics have taken a hit given the outsized predictions that are not aligned with economic reality,” said Joe Brusuelas, chief economist at RSM US.
The president has urged the Fed to cut rates to channel more money into the economy, but many economists warn that easier policy could worsen inflation and deepen both political and economic challenges.
Trump jobs report fuels debate over interest rates
Disputing mainstream monetary theory, the president said Friday that gross domestic product could grow “12, 13, 14, 15%” if rates were lower, downplaying inflation risks. “We could have a GDP that would break every single record,” he said.
His approval rating on the economy was 32% in mid-summer, according to AP-NORC polling, down from 50% when Republicans faced midterm voters in 2018. Threats to curb foreign trade could also sap growth and weigh further on those ratings. New tariffs on Canada have become a political issue in Senate contests in Maine and Michigan.
Administration officials maintain their agenda is working. They point to artificial intelligence as a driver of future productivity, argue that last year’s tariffs will onshore factory jobs, say tax cuts will spur investment and contend that anti-fraud efforts will save taxpayers money.
“I expect higher growth,” said Christopher Phelan, chairman of the White House Council of Economic Advisers. “We’re doing stuff to make good things happen.”
Phelan noted recent job gains are roughly double what is needed to keep pace with population growth and said productivity advances could lift overall growth in coming years. He also acknowledged that growth alone cannot fix the nation’s finances.
With Social Security and Medicare costs outpacing revenues, rising obligations will strain the budget regardless of near-term gains. An analysis by Ernie Tedeschi, head of economic insights and research at Stripe, found that sustaining more than 3% annual growth for a decade would merely stabilize today’s already high debt burden.
Tedeschi said he would be “thrilled” if AI delivered that growth for 10 straight years, but called such expectations based on past computing advances “wildly optimistic.” “We should absolutely not be planning for the optimistic scenario,” he said.
Until Friday’s rate comments, the administration had spent the week trying to boost public confidence. Treasury Secretary Scott Bessent touted the benefits of stronger growth at a G20 finance ministers gathering in North Carolina, while Commerce Secretary Howard Lutnick highlighted innovation at related meetings.
Bessent said he is working with White House budget director Russ Vought on a plan to “bring down the level of the debt, deficit.” Meaningfully reducing a roughly $2 trillion annual deficit, which could top $3 trillion in a decade, would likely help ease rates but would also invite political backlash from potential spending cuts and tax increases.
Brusuelas said addressing the debt in a credible way would require trade-offs that calm markets.
“We need a period of slower growth in government spending, that includes outright reduction in spending in addition to tax increases that all would reduce deficits and interest rates,” he said.
For Hawaiʻi households, the stakes are tangible. Elevated rates and inflation feed directly into mortgage costs, food and energy prices, and travel demand, core elements of the islands’ tourism-driven economy. Whether the Fed stays the course or pivots, local families and businesses will be watching the data as closely as Washington does.
2 Responses