By Gloria Ogbonna
Welcome back to Friday and to the Breitbart Business Digest, our weekly roundup of the biggest economic and political battles of the past seven days compiledas always, without the benefit of subpoena power over those who mysteriously ignore our emails.,
This week marked the unmistakable opening salvo of what might best be described as Fed War 2026. And in a twist few expected, the first shot was not fired by President Donald Trump, but by Federal Reserve Chair Jerome Powell himself.
Powell insists he is merely defending the Federal Reserve’s “independence” from what he portrays as an intrusive and politically motivated Justice Department. His critics, however, see something very different: a central banker panicking as scrutiny finally arrives at his doorstep.
Jay Powell vs. Donald Trump: A Long-Running Feud Reignites
The conflict between Donald Trump and Jerome Powell did not begin this year. Its roots stretch back to the end of Janet Yellen’s tenure as Federal Reserve chair, when Trump newly in office and determined to deliver rapid economic growth—was searching for a replacement.
Trump has never fit neatly into the traditional monetary-policy boxes. He is not a textbook dove, but he is unapologetically pro–low interest rates.
Like any seasoned real estate developer, Trump understands that lower borrowing costs fuel construction, investment, and expansion. In his view, America had enormous work to do modernizing infrastructure, rebuilding industry, and accelerating growth and cheap credit was a powerful tool to get it done.
According to accounts from inside the administration, Trump passed over several candidates he viewed as overly committed to high-rate orthodoxy.
Eventually, he settled on Jerome Powell, encouraged in part by then Treasury Secretary Steve Mnuchin and by Powell’s own presentation as a pragmatic, business-friendly figure. Trump believed he was appointing a partner who would broadly align with his economic vision.
That assumption collapsed quickly.
Under Powell’s leadership, the Federal Reserve embarked on a sustained campaign of interest-rate hikes, raising rates at nearly every other meeting even as inflation remained stubbornly below the Fed’s stated two percent target.
To Trump and his allies, it looked less like cautious monetary stewardship and more like an effort to throttle an economy that was performing too well under a Republican president.
A Tale of Two Presidencies
Fast forward to the Biden administration, and the contrast could not have been sharper. Inflation surged well beyond the Fed’s target, driven by massive deficit spending, supply-chain disruptions, and global instability.
Yet Powell initially waved it all away, declaring inflation “transitory” and echoing the White House narrative that price increases were largely out of policymakers’ control.
Notably absent was any serious public criticism of President Biden’s unprecedented spending programs despite their obvious inflationary implications. When the Fed finally did begin hiking rates, inflation had already reached levels not seen in four decades. Even then, Powell appeared reluctant, almost apologetic, treating rate hikes as a regrettable necessity rather than an urgent obligation.
The result was disastrous: runaway inflation, eroded purchasing power, and a growing sense that the Fed had abandoned even the appearance of neutrality.
The central bank’s increasing entanglement with progressive causes, including its embrace of DEI initiatives, only reinforced the perception that it had become part of the broader Democratic policy apparatus rather than an independent institution.
The Election-Year Pivot
As the 2024 election approached, the Fed made yet another abrupt pivot this time toward rate cuts. Instead of waiting until after voters had gone to the polls, Powell’s Fed began easing monetary policy just weeks before Election Day.
Whether intentional or not, the move conveniently supported the Biden-Harris campaign narrative that inflation was “under control” and the crisis had passed.
To many observers, this was yet another example of the Fed shielding its preferred political party. And when Trump returned to office, the pattern repeated itself in reverse.
The rate cuts stopped cold. Powell and other Fed officials justified holding rates steady by speculating without concrete evidence—that Trump’s signature policies, including tariffs and stricter immigration enforcement, could prove inflationary.
Once again, the Fed appeared to be positioning itself directly against a Trump-led economic agenda.
Powell Panics
This week, the simmering tension boiled over. In an unprecedented move, Powell released a video statement on a Sunday night announcing that the Justice Department had issued subpoenas related to the renovation of the Fed’s Washington, D.C., headquarters and Powell’s testimony about those renovations before a Senate committee.
Rather than simply deny wrongdoing, Powell escalated dramatically. He claimed the inquiries were mere “pretexts,” accused the Justice Department of trying to undermine Fed independence, and suggested he was being threatened with criminal prosecution.
But within days, that narrative began to unravel.
Reports indicate there is no evidence of a coordinated White House effort to target Powell or seize control of monetary policy. Key figures within Trump’s economic team were reportedly blindsided by the news. The subpoenas originated from the office of U.S. Attorney Janine Pirro, without consultation with the Attorney General or the president himself.
Pirro has stated she issued the subpoenas only after the Fed failed to cooperate with earlier, informal requests for information.
The idea of a grand conspiracy also collapses under basic logic. Powell’s term as Fed chair expires in roughly four months. Trump will soon have the authority to appoint a successor regardless.
There was no strategic need to deploy the Justice Department to weaken Powell’s position—it was already ending.
Nevertheless, the legacy media sprang into action, reviving familiar playbooks. As with the Russia investigation years earlier, the most damaging possible interpretation for Trump was instantly declared the correct one.
Editorial pages filled with dire warnings about the end of Fed independence and the collapse of the global economy. A handful of Republican “Panicans” echoed the hysteria, threatening to withhold support for Trump’s nominees until the investigation was “resolved.”
Adding another layer to the story, a New York Times report revealed that Powell had spent years cultivating relationships on Capitol Hill—relationships he could now leverage in a political showdown with the White House. In effect, the defender of Fed “independence” had been quietly lobbying lawmakers behind the scenes.
History may not remember Powell as the man who saved the Federal Reserve from political pressure, but rather as the chair whose actions placed its credibility at the greatest risk.
The Boom They Keep Calling a Bust
While Washington obsesses over Powell’s theatrics, a quieter story is unfolding in the real economy—and it doesn’t fit the preferred narrative.
For decades, analysts judged economic health by raw job creation numbers. But in a tight labor market with low unemployment, that framework breaks down.
Growth now comes from productivity gains, not endless payroll expansion. This misunderstanding what we’re calling the Payroll Fallacy was on full display this week.
The Washington Post declared Trump’s promised manufacturing revival a failure, citing declines in manufacturing employment since April. Bloomberg followed suit with nearly identical commentary. The implication was clear: fewer factory jobs must mean a struggling sector.
But the facts say otherwise.
After hitting rock bottom in late 2024, U.S. factory output has rebounded sharply. Productivity is rising. Domestic manufacturing is once again seen as investable, no longer trapped in an offshoring death spiral. Industrial production data released Friday showed business equipment output up 10.1 percent year over year in December.
Factories are not dying they’re modernizing, automating, and producing more with fewer workers.
In short: we’re back. Big time. And the only real drag on momentum appears to be a Federal Reserve leadership seemingly determined to slow things down.
Happy Sovereignty Day
As a final note, while most Americans celebrate independence on July 4, there’s a strong case for remembering January 14, 1784 the day the Continental Congress ratified the Treaty of Paris. That was the moment American sovereignty became not just declared, but legally recognized.
It’s a fitting reminder this week, as debates over independence economic, political, and institutional once again take center stage.
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