We’re forfeiting wealth unnecessarily — and this isn’t the chair’s first misstep
By Peter Navarro | The Washington Times | July 8, 2025
OPINION:
Federal Reserve Chair Jerome Powell’s stubborn refusal to lower interest rates — despite ample evidence calling for such action — is inflicting serious economic damage on America. Even keeping rates just half a percentage point higher than economic conditions justify carries heavy costs in growth, employment, household finances and the federal budget.
Let’s examine precisely how Mr. Powell’s misguided interest rate policy hurts the nation. A mere half-point overly tight Federal Funds rate drags down GDP growth by roughly a quarter to half a percentage point each year. Considering America’s $28 trillion economy, that’s $70 billion to $140 billion annually in lost economic output — wealth that is unnecessarily forfeited.
This loss translates directly into lower federal tax revenues, intensifying budget deficits and deepening our national debt. With federal revenues typically averaging around 18% of GDP, a GDP shortfall of $70 billion to $140 billion per year means federal revenues fall by roughly $15 billion to $30 billion annually. Over a 10-year span, this lost revenue snowballs into an additional $150 billion to $300 billion added to the national debt. Mr. Powell’s stubbornness, therefore, directly undermines America’s fiscal stability.