Fed’s Rate Cut Proves Consumers are Desperate for Relief from High Prices, Economic Upheaval, Says Groundwork’s Jacquez
Fed’s Rate Cut Proves Consumers are Desperate for Relief from High Prices, Economic Upheaval, Says Groundwork’s Jacquez
The Federal Reserve today announced it will cut the federal funds rate by 25 basis points to a range of 3.5% to 3.75%. This is the third consecutive rate cut as regulators grow desperate to counter the impacts of President Trump’s reckless tariffs and provide relief to American families before the holidays.
The Fed’s decision comes as Americans struggle with higher prices on essentials, a frozen housing market, and clear signs that the labor market is losing steam. Real consumer spending was flat in September and consumer confidence has taken a hit, reflecting the fear and fatigue working families are feeling at the end of a tumultuous year of economic mismanagement by the Trump administration.
Alex Jacquez, Chief of Policy and Advocacy at the Groundwork Collaborative, shared the following reaction:
“Trump’s reckless handling of the economy has backed the Fed into a corner—stuck between rising costs and a weakening job market, it has no choice but to try and offer what little relief they can to consumers via rate cuts. But the Fed cannot undo the damage created by Trump’s chaos economy, and working families are heading into the holidays feeling stretched, stressed, and far from jolly.”
ADDITIONAL ANALYSIS
- The economy is weakening. The most recent jobs report showed unemployment rising to 4.4% in September, the highest rate since 2021. Real consumer spending was flat in September, with most spending being driven by wealthier consumers.
- Layoffs and rising prices are impacting consumer confidence, which dropped sharply in November.
- Prices remain elevated. Even with a weakened labor market, inflation rose 2.8% from last year, well above the Fed’s 2% target. Families face higher prices for essentials like gasoline, groceries, and apparel. The latest consumer sentiment data show that many consumers remain worried about rising prices.
- Dissents signal disagreement inside the Fed. Chair Powell has acknowledged differing views on how to stabilize prices while maximizing employment. Officials want rates low enough to avoid adding pressure on the economy, but they disagree on where that point is. In this meeting, one member pushed for a deeper cut, suggesting they see the economy as even weaker than the consensus view, and two members recommended holding rates steady, suggesting that others believe inflation is still an elevated risk.
- The Fed is acting under data constraints. The federal government shutdown delayed key monthly job and inflation reports. Policymakers lack readings on October and November inflation, monthly job gains, and consumer spending, forcing them to make decisions without visibility of the full economic landscape.
