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The Decades-Old Legal Question at the Heart of the Fed Chair Showdown

  • President Trump threatened to fire Jerome Powell if he does not step aside, while Powell plans to continue as chair pro tempore after May 15 if the Senate hasn’t confirmed a successor.
  • Historically, five Fed chairs continued serving when successors hadn’t been confirmed, but a 1978 legal dispute arose over presidential authority.
  • Changes to the law since the late 1970s have undercut the president’s ability to designate an acting Fed chair.

 
Trump’s Fed Chair Pick Is Caught in an Unprecedented Standoff

  • Kevin Warsh’s Fed chairman confirmation faces a roadblock from Sen. Thom Tillis due to a Justice Department probe supported by President Trump.
  • President Trump defended the probe into Chair Jerome Powell and said he would fire Powell if he stays after May 15.
  • Prosecutors from U.S. Attorney Jeanine Pirro’s office sought to escalate the probe, but a Fed lawyer objected to their site visit.
Fed’s Beige Book Shows Iran War Has Economy on Edge

  • Businesses face uncertainty from the Iran war, affecting costs, customers, and the economy, according to a Federal Reserve survey.
  • The Middle East conflict is a major source of uncertainty, complicating business decisions on hiring, pricing, and capital investment.
  • Companies are mostly hiring to replace staff, not to expand, while consumers show increased price sensitivity amid uneven demand.
Trump Threatens to Fire Powell if He Doesn’t Resign When Fed Chair Term Ends

  • President Trump threatened to fire Federal Reserve Chair Jerome Powell, doubling down on a Justice Department investigation.
  • Fed officials are protected by a law limiting removal reasons, which the Supreme Court is currently weighing in a separate case.
  • Fed Chair Jerome Powell’s term ends next month, but he can remain a voting board member until 2028.
China’s Economy Starts Year on Strong Footing, but Iran Risks Loom

  • The Chinese economy grew 5.0% in the first quarter of 2026, beating expectations, but showed signs of weakness amid global supply chain disruptions.
  • March dollar-denominated exports grew 2.5%, a sharp drop from January-February, and the urban unemployment rate rose to 5.4%.
  • March retail sales grew 1.7%, below forecasts.
U.K. Economy Posted Faster-Than-Expected Growth Ahead of Energy-Price Shock

  • The U.K. economy grew 0.5% in February, but a recovery is threatened by sharply higher energy prices following U.S. and Israeli attacks on Iran.
  • The International Monetary Fund lowered its U.K. growth forecast to 0.8% for this year, citing reliance on imported gas and fewer interest-rate cuts.
  • Treasury chief Rachel Reeves called the U.S. and Israeli attacks on Iran a mistake, and private-sector activity slowed in March.
IMF Sees Global Government Debt Matching Annual Output in 2029, a Year Earlier Than Expected

  • The International Monetary Fund forecasts global government debt will match annual economic output by 2029, driven by the U.S. and China.
  • The U.S. government’s gross debt is forecast to reach 135.5% of economic output by 2029, with no debt consolidation plan in sight.
  • China’s government debt is forecast to reach 120.3% of GDP by 2029; a prolonged Middle East conflict could push global debt to 121%.
Eurozone Inflation for March Revised Higher on Sharper Energy Prices

  • Eurozone consumer prices rose 2.6% in March, higher than previously thought, due to the Iran war’s energy shock.
  • Economists expect inflation to near 3%, while European Central Bank President Christine Lagarde noted the war’s impact is significant.
  • Investors priced in at least two quarter-point interest-rate hikes this year; the IMF downgraded eurozone growth to 1.1%.
U.S. Import Prices Rise Less Than Expected in March

  • U.S. import prices rose 0.8% in March, less than the 2.4% increase expected by economists, the Bureau of Labor Statistics said.
  • Higher fuel costs drove the overall increase, with petroleum import prices rising 9.4% amid the war in Iran.
  • Nonpetroleum import prices increased 0.1% in March.
New York Fed Survey Shows Manufacturing Expansion

  • New York state manufacturing activity picked up in April, with the Empire State Manufacturing Survey’s headline index rising to 11.
  • The Empire State Manufacturing Survey’s indexes for new orders and shipments also increased in April.
  • The forward-looking prices paid index rose by 18.5 points to 61.6 in April, from 43.1 in March.
 

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