US Q3 GDP Hits 4.3%: Trump Demands Fed Cuts Despite "Red Hot" Economy

The US economy defied slowdown fears with a blistering 4.3% annualized growth in the third quarter of 2025, shattering market expectations of 3.3%. However, the strong print has paradoxically intensified the political battle over monetary policy, with President Trump doubling down on demands for rate cuts regardless of economic heat.

The “Loyalty Test” for the Next Fed Chair

In a direct challenge to central bank orthodoxy, President Trump declared on Tuesday that the next Federal Reserve Chair must commit to lowering interest rates even when the economy is performing well. “I want a Fed Chair who lowers rates when the market is good, not one who destroys it for no reason,” Trump stated on social media. This “loyalty test” complicates the succession planning for Jerome Powell's replacement in 2026, with candidates like Kevin Hassett and Kevin Warsh viewed as frontrunners.

Data vs. Policy

White House Adviser Kevin Hassett argued that despite the 4.3% GDP print, the Fed is “behind the curve” on easing, citing AI-driven productivity gains as a deflationary force that allows for looser policy. Meanwhile, Treasuries faced selling pressure, pushing yields higher as traders grappled with the cognitive dissonance of a booming economy, sticky inflation (Core PCE at 2.8%), and immense political pressure for monetary stimulus.

Fiscal-Monetary Shift?

Treasury Secretary Scott Bessent has also floated a radical shift in targeting, suggesting the Fed move from a fixed 2% inflation point to a flexible “range” (e.g., 1.5%-2.5%) and potentially scrapping the dot plot to reduce market noise. Such changes could fundamentally alter the USD's long-term valuation metrics.