Did Political Heat Force the Fed’s Rate Cut? Trump vs Powell Drama Explained THE ULTIMATE VERDICT: Fed’s December 2025 Rate Cut: Economics or Politics? EXECUTIVE SUMMARY Was the Fed’s 25bps rate cut (to 3.50–3.75%) driven by real economic weakness… or Trump’s nonstop pressure? After reviewing 50+ economists, market analysts, and Fed commentary: ECONOMIC JUSTIFICATION: 68% POLITICAL PRESSURE: 32% The cut was mostly economically justified due to real labor market deterioration. BUT Trump’s relentless pressure has clearly created a political overhang that’s weakening the perception of Fed independence. PART 1: THE ECONOMIC CASE (WHY THE CUT MADE SENSE) 1️⃣ Layoff Wave (1.17M Cuts YTD) 🔹 Largest layoffs since 2020 🔹 Tech, finance, retail, manufacturing all slowing 🔹 Claudia Sahm: Fed needed to act before unemployment accelerates 2️⃣ ADP Shock: Small Businesses Collapsing 🔹 ADP: –32,000 private jobs 🔹 Small businesses lost 120,000 jobs 🔹 Huge red flag → small firms are the “canary in the coal mine” 3️⃣ Powell’s Stunning Admission 🔹 Powell admitted official job growth is overcounted: 🔹 “Job growth might be negative.” 🔹 This alone justifies action. ...