Politics vs. Policy: Powell, Trump, and Market Reactions
Market Recap for the Week of April 20, 2025
The U.S. stock market, as measured by the S&P 500, lost 2.28% during this shortened trading week. The market was closed on Friday in observance of Good Friday. Most of the week’s decline occurred on Wednesday, as Fed Chair Jerome Powell spoke at the Economic Club of Chicago. To quote Powell directly: “The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.” Later in the discussion, Powell was asked whether the Fed would intervene if the stock market continued to decline. He responded directly: no. He then went on to explain that the market is volatile because of significant uncertainty, so volatility should be expected, and that markets are functioning as intended.
President Trump was likely not pleased with these comments. On Thursday, he said, “Powell’s termination cannot come fast enough.” However, the President cannot remove the Fed Chair without cause, and simply disagreeing with his policy would not constitute sufficient grounds for removal. This is not new—President Trump, who appointed Jerome Powell during his first term, was also critical of him back in 2019, saying Powell was like a golfer who couldn’t putt. The current bickering over Powell is not particularly noteworthy, as it’s very unlikely any action will be taken. Nevertheless, that didn’t stop Senator Elizabeth Warren from claiming that the “markets will crash” if Trump removes Powell. In my opinion, this is largely political theater and should be viewed as such.
“Powell made clear the Fed won’t step in to calm volatility—reminding investors that markets are functioning as intended, even in turbulent times.”
Chart of The Week
The chart of the week is one we’ve shown before. It highlights the difference in how Republicans and Democrats view the economy. Unsurprisingly, there tends to be a negative correlation between individuals’ perceptions of economic conditions and the party in control of the White House. Put simply: when a Republican is in office, Democrats tend to believe the economy is performing poorly. Conversely, when a Democrat is in the White House, Republicans often hold a negative view of economic performance. Note the shift in sentiment shown on the chart when President Trump took office—Republicans' views of the economy improved immediately, while Democrats' views worsened. The point of this chart is to caution investors against allowing their political views to influence their investment decisions.
The commentary in this blog is for informational purposes only and should not be taken as personalized investment advice
Source: Pew Research Center, J.P. Morgan Asset Management.
The survey was last conducted in February 2025. Pew Research Center asks the question: “Thinking about the nation’s economy, how would you rate economic conditions in this country today… as excellent, good, only fair, or poor?” S&P 500 returns are average annualized total returns between presidential inauguration dates and are updated monthly.
Guide to the Markets – U.S. Data are as of April 16, 2025.
