America's Economy Before the Threat of Recession: How Much Responsibility Lies with the Fed?

After the non-farm payroll report (NFP) was revised down last night, the market has raised concerns that the economy in America may be entering a recession phase. Many opinions suggest that if this scenario occurs, the Federal Reserve in America (Fed) must bear up to 90% of the responsibility.

1. The Fed and the Change in Interest Rate Argument In 2021: When inflation soared to 5%, the Fed considered the situation to be "temporary". As a result, the quantitative easing policy (QE) continued to be maintained. In 2025: Inflation had fallen to around 3%, but the Fed was overly cautious, concerned about the risk of inflation bouncing back and thus delayed lowering interest rates. This shows that the Fed continuously changes its stance but always chooses the "slow response" scenario. This hesitancy causes the economy to bear greater risks.
2. Politics and the Fed: A Difficult Boundary to Separate Although positioned as an "independent" agency, the Fed is actually very difficult to escape political influence. Chairman Jerome Powell certainly does not want to see inflation return during his term. But there is an even more important factor: the unemployment rate. Inflation: people can accept a moderate level, considering it as an increase in the cost of living. Unemployment: again, it is a much more sensitive political issue, as "losing a job, not finding a new one" directly threatens the livelihoods of voters. Therefore, if the labor market or the economy shows clear signs of weakening, Powell will be forced to reverse course and lower interest rates to save growth, even though he previously asserted that "America has achieved a soft landing."
3. When the Fed Becomes a Political Tool Some analysts believe that the Fed is currently being influenced by the Democratic Party, especially in the context of the 2024 election, which has brought Trump back into the political arena. Maintaining a tight monetary policy may be seen as a way to "suppress" the economy to make things difficult for Trump. Of course, the Fed will never publicly acknowledge this, but the decisions to "delay interest rate cuts" despite weakening economic data somewhat reinforce the argument that politics has deeply interfered with monetary policy.
4. Upcoming Scenario If the American economy continues to signal a strong cooling, especially as unemployment rises, the Fed will find it difficult to maintain its stance of "high interest rates for longer." A rate cut is almost certain to occur, as Powell certainly does not want to be labeled as the person who "pushed America into recession." 👉 In summary, the Fed is in a difficult position: to control inflation, it must keep interest rates high, but if the economy falls into recession and unemployment spreads, political pressure will force the Fed to act. The issue is that a delay in response could result in the failure of both goals: failing to control inflation while pushing the economy into a recession.