Donald Trump has reacted angrily to a stronger-than-expected US jobs report, attacking inflation fears, rising interest rates and America’s trading partners instead of celebrating the latest sign of resilience in the economy.
Employers added 162,000 jobs in August, according to the US Bureau of Labor Statistics, while unemployment remained unchanged at 4.1 per cent. The figures were considerably stronger than economists had expected and included upward revisions to employment in June and July.
But the report also raised concerns that a robust labour market could make it harder for the Federal Reserve to cut interest rates, as stronger demand for workers can add to pressure on wages and prices.
Speaking to reporters in the Oval Office on Friday, Mr Trump rejected that argument and criticised markets for responding negatively to the data.
“Success does not cause inflation. Stupidity causes inflation,” he said, describing it as “crazy” that share prices had fallen because investors feared higher rates.
The president has spent 20 months promising that his policies would deliver an immediate and historic economic boom. Growth, however, has so far remained close to 2 per cent a year — slower than during Joe Biden’s presidency — while inflation and borrowing costs continue to trouble households, businesses and the government.
Mr Trump also renewed his demand for lower interest rates, arguing that cheaper borrowing would unleash much faster growth. He said gross domestic product could expand by “12, 13, 14, 15 per cent” if rates were reduced, adding that the US could achieve growth that “would break every single record”.
His comments came after he threatened to restrict trade with countries that run a surplus with the United States. In a post on his social media platform, he wrote: “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”
Trump’s economic credibility under pressure
The president’s frustration reflects the political difficulty created by an economy that is neither in crisis nor delivering the dramatic gains he promised. A healthy jobs figure may support the case that growth is continuing, but it can also strengthen the argument for interest rates to remain high or rise further if inflation proves persistent.
Higher Treasury yields have already increased the cost of financing the US government. The yield on the 10-year Treasury note rose to about 4.79 per cent on Friday, while the national debt has passed $40 trillion.
Joe Brusuelas, chief economist at RSM US, said the administration’s credibility had been damaged by predictions that were out of line with economic reality.
“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,” he said.
Mr Trump has blamed high borrowing costs and weak growth on the Federal Reserve, overseas trading partners and circumstances including tariffs and energy disruption linked to the conflict with Iran. Critics have argued that some of his own policies, particularly import tariffs, have helped to sustain inflationary pressure.
His approval rating on the economy stood at 32 per cent in polling conducted during the summer by the Associated Press-NORC Center for Public Affairs Research. That compares with 50 per cent when Republicans last faced midterm elections under Mr Trump in 2018.
Republicans are also facing political risks from the administration’s trade policies. Tariffs imposed on Canada have become an issue in Senate contests in Maine and Michigan, where candidates are seeking to defend narrow Republican advantages.
White House points to AI and tax cuts
Trump administration officials insist that the promised expansion is still to come. They argue that artificial intelligence will lift productivity, tariffs will encourage more manufacturing in the US, tax cuts will stimulate business investment and efforts to tackle fraud will reduce pressure on taxpayers.
Christopher Phelan, chairman of the White House Council of Economic Advisers, said the recent pace of hiring was roughly twice what was needed to keep up with population growth.
“I expect higher growth,” he said. “We’re doing stuff to make good things happen.”
Mr Phelan said productivity gains could support stronger growth for several years, although he acknowledged that faster expansion alone would not resolve the country’s fiscal problems.
Social Security and Medicare costs are rising faster than government revenues, while the annual budget deficit is about $2 trillion and is projected to exceed $3 trillion within a decade.
Ernie Tedeschi, head of economic insights and research at Stripe, said annual growth above 3 per cent for the next ten years would only stabilise the government’s debt burden. He described sustained gains of that scale driven by artificial intelligence as possible but highly optimistic.
“We should absolutely not be planning for the optimistic scenario,” he said.
Treasury Secretary Scott Bessent has said he is working with budget director Russ Vought on a plan to reduce the debt and deficit. But bringing down borrowing would probably require politically difficult choices, including spending cuts or tax rises.
Mr Brusuelas said the president would need to accept slower growth in government spending and make difficult fiscal decisions if he wanted to reassure financial markets and reduce interest rates.
