"Sorry, of a downturn"

The fact that the Fed reduced the interest rate by half a point (instead of a quarter point) tells me that they know they waited too long to start lowering rates.

Something similar happened when they were raising rates: They waited a whole year after Jerome Powell warned us -- twice in one month -- that inflation was coming. They waited a whole year before starting to increase interest rates. Clearly, that is the reason inflation reached 9 percent.

Because of that initial delay, when they finally did start raising rates they went with a quarter-point increase, once; then a half-point increase, once; and then four three-quarter-point increases, one after the other. It would have been better to start earlier and use small increases. It would have been gentler on the economy. And inflation would have peaked sooner, at a lower number.

Changes in the Fed Funds Rate (Upper Limit shown)

The rate hikes were not gradual. Therefore, they risked doing harm to the economy. And again, similarly now: With unemployment no longer "low" and no longer rising by tiny increments, but above 4 percent and rising more noticeably now, the Fed -- in this economy that already stinks of recession -- now they go gangbusters with an opening bid of half a percent decrease in the interest rate.

At CNBC's "Fed meeting recap: Chair Jerome Powell defends central bank’s decision to go big with first cut" of 18 September, they say:

Risk of downturn not heightened following rate decision, Powell says

Federal Reserve Chair Jerome Powell does not see the risk of an economic downturn being “elevated” following the super-sized cut.

“I don’t see anything in the economy right now that suggests that the likelihood of a recession, sorry, of a downturn, is elevated,” he said.

“I don’t see that,” he continued. “You see growth at a solid rate. You see inflation coming down. You see a labor market that’s still at very solid levels. So, I don’t really see that now.”

But what would you expect him to say??? "We screwed up" ??  Or maybe "Donald Trump forced our hand" ??  You're not likely to hear him admit any such thing.

Hopefully, Powell is right. I'll have to keep an eye on unemployment, to see how things go. Here's where we stand now:

Unemployment (blue) and the Federal Funds Rate

To my eye, unemployment started going up around January 2023 - more than a year and a half ago, now -- and started accelerating around January 2024. They waited too long before bringing rates down.

The irony is that (a) they waited too long before starting to raise rates, and (b) they waited too long before starting to lower rates. And the grand triple crown irony is that, if I am right, it was Donald Trump's plan to wait a year before starting to raise rates, and Donald Trump's idea to wait a year before starting to lower them -- all part of election interference designed to make voters angry at Joe Biden for what Trump calls "the Biden inflation".

My idea of a good outcome would be to convince the MAGA people that it was Trump's delay that drove inflation up to 9 percent.

And now, if I'm right, unemployment is accelerating upward toward a recession. If Trump loses, he'll say the recession is not his fault. If he wins, he'll blame Biden anyway. The good outcome would be that the policymakers he pressured would tell the world that he pressured them. Tell the world now, before the election.