Justin Wolfers on Trump's Fed Nomination, the Dollar, and the BLS

Kevin Warsh's Fed Nomination

• 📌 The President has nominated Kevin Warsh, nicknamed "Handsome Kevin," to be the next Fed chair, a decision influenced by perceived handsomeness over qualifications.
• 💡 Warsh is historically a hawk, meaning he prioritizes fighting inflation by raising interest rates, which contrasts with the President's apparent desire for low interest rates.
• ⚠️ A key concern is Warsh's past criticism of low interest rates during the 2008 financial crisis, despite high unemployment, raising questions about his current stance and potential policy direction.
• ❓ It's unclear if Warsh has changed his views or if he is prioritizing the job over his economic principles, leading to speculation about a potential deal with the President.

The U.S. Dollar and Tariffs

• 📉 The U.S. dollar has recently fallen, making American goods cheaper abroad but foreign goods more expensive for Americans.
• ⚠️ While a lower dollar can boost exports, a significant drop could signal a loss of confidence in the U.S. economy, which is a cause for concern.
• 🌍 The speaker expresses worry that the rest of the world may be losing patience with the United States, citing recent geopolitical events as context.

Bureau of Labor Statistics Appointment

• ✅ In a positive development, Brett Matsumoto, a qualified and nonpartisan economist with 15 years at the Bureau of Labor Statistics (BLS), has been appointed as the new commissioner.
• ⚠️ This follows the controversial firing of the previous commissioner for reporting truthful job market data and a failed nomination of a highly unqualified candidate.
• 🎯 The appointment of Matsumoto is seen as a return to normalcy, restoring credibility to government statistics after a period of attempted undermining.

Senate Confirmation and Fed Independence

• 🏛️ Kevin Warsh's Senate confirmation process will involve scrutiny regarding his past economic views and any potential promises made to the President.
• ⚖️ Senator Tom Tillis's role is crucial, as he has indicated that the President's threats against Fed officials must cease for Warsh to pass committee.
• 🔍 Hard questions will be asked about Warsh's policy shifts, past mistakes, and any potential compromises to the Federal Reserve's independence.