The U.S. economy added fewer-than-expected jobs in August and one of Trump’s top economic advisors noted on Friday that the Trump economy is “facing a headwind.”
Tomas Philipson, the acting chairman of President Trump’s Council of Economic Advisors, appeared on Yahoo Finance’s “On the Move” and laid out three distinct headwinds he sees in spite of “a lot of good news in this report."
The August report came after a critical month with uncertainty keeping investors on edge as they navigated dramatic stock swings in both directions to close out the summer.
"On the international front, there is a global slowdown,” Philipson said, focusing on the the struggles of European countries. "We can't control the world economy,” he said, adding that “there is a global slowdown and we have to live with that.”
Echoing his boss, Philipson said "we are sort of facing a headwind with the Fed." He pointed specifically to increases in the Federal Reserve funds rate since Trump took office after being “flat during Obama.”
The final challenge is the one that Trump has brought upon himself (and he retains the ability to end): the trade war with China. Philipson, who is on leave from his job as a professor of public policy at the University of Chicago, acknowledges that the tariffs have caused “some churn in the market,” but he gave no indications that the administration would back down.
Bob Doll, chief equity strategist at Nuveen, was less sanguine than Philipson when he spoke to Yahoo Finance on Friday. “I think everybody’s losing the trade war,” Doll said. “You don’t solve in a few months a problem that’s taken decades to transpire.”
Philipson stood behind his boss, who tweeted Friday that “China is eating the tariffs.” "There is no question [Trump] is doing the right thing,” Philipson said, waving away questions about the economic impacts of the trade war. "Econ 101 discussions don't really apply when you are trying to create leverage.”
Ben Werschkul is a producer for Yahoo Finance in Washington, DC.