Trump Considers Herman Cain For Federal Reserve Board

Apr 5, 2019
Originally published on April 5, 2019 5:17 am
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STEVE INSKEEP, HOST:

The U.S. economy added 196,000 jobs in March. We learned that on the same morning that we're discussing some news about a vital agency that influences the economy. President Trump has said he would like to nominate Herman Cain to the board of the Federal Reserve, which monitors both inflation and employment and tries to keep both where people want them to be. NPR's chief economic correspondent Scott Horsley is in our studios, talked about this. Hi there, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Steve.

INSKEEP: So when I think about Herman Cain, I think about the three Ps - pizza, presidential campaign, and just a bit of monetary policy. What's his background?

HORSLEY: Well, he did serve for a time as chairman of the Federal Reserve Bank of Kansas City. He has also, however, espoused some unorthodox views on monetary policy. Back in 2010, for example, he advocated a return to the gold standard. That's at the time when he was running for the White House in that crowded GOP field. He earned some notoriety for his 9-9-9 tax plan. But ultimately, he dropped out of the race amid allegations that he cheated on his wife and sexually harassed women.

Nevertheless, President Trump told reporters yesterday he thinks Herman Cain will easily pass the background check that Trump says is now underway. And the president says he thinks the former Godfather's Pizza CEO would do very well as one of the seven members of the Fed's governing board.

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PRESIDENT DONALD TRUMP: He's a highly respected man. He's a friend of mine. He's somebody that gets it. And I hope everything goes well. But Herman Cain is a very good guy.

INSKEEP: Although, as you pointed out, unusual views from time to time on monetary policy. What's it mean that this would be a second straight unusual nomination by President Trump for the Fed board?

HORSLEY: Trump himself has been very critical of the central bank. He blames last year's rate hikes for putting the brakes on economic growth here in the U.S. And that criticism has continued even now that the Fed has said it's not planning to hike rates anymore for the rest of this year.

Two weeks ago, President Trump said he was going to nominate conservative commentator Stephen Moore of the Heritage Foundation. That's drawn considerable criticism from people who say Moore would be too political, that he would compromise the Fed's independence. We should point out though, Steve, even though the president's sort of floated these two trial balloons, neither Moore nor Cain has officially been nominated.

INSKEEP: OK. And, of course, the president's statements about what he will do - this is just a statement of fact - his statements about what he will do are not necessarily a reliable guide to what he actually does in days afterward. But we do have this jobs report - 196,000 jobs added in March. What does that mean?

HORSLEY: It's reassuring that the very low jobs number we saw for February was kind of a fluke and not a signal that the economy is grinding to a halt. At the same time, we are seeing somewhat slower job growth than we were seeing at the end of last year. The average over the last three months now is about 180,000 jobs a month. The last three months of 2018, we were averaging 233,000. So there is a bit of a downshift. Sarah House is a senior economist at Wells Fargo.

SARAH HOUSE: We are seeing overall economic growth slow, so that's going to reduce the pace of hiring. We're also seeing businesses are having a hard time finding workers. And so if they're not able to fill these positions, that's going to reduce the overall pace of job gains as well.

HORSLEY: We did see modest job decline, Steve, in March in retail and manufacturing.

INSKEEP: Are wages still going up?

HORSLEY: They are. They're going up a little over 3 percent per year, which is pretty good, maybe not as much as you would think with unemployment under 4 percent. That's partly because some folks who had been on the sidelines keep coming back into the labor force...

INSKEEP: Right.

HORSLEY: ...Suggesting employers still have room to hire without bidding up wages in a way that would really cause inflation to spike.

INSKEEP: Scott, I'm sure you've earned a raise with your reporting today.

HORSLEY: (Laughter) Thank you.

INSKEEP: NPR economics correspondent Scott Horsley. Transcript provided by NPR, Copyright NPR.