These most recent developments illustrate a growing resistance to the U.S. dollar. With many economic indicators suggesting an imminent U.S. economic contraction, a reshuffling has begun across industries. U.S. manufacturing PMI taken by Institute for Supply Management has fallen for eight consecutive months. Many analysts are predicting that this downward trend will continue. The “shadow chair” Kevin Hassett is getting ready to play his leading role. Mns are a key advisor on economic policy. He’s a very strong candidate to replace Jerome Powell as chair of the Federal Reserve if President Trump decides to make that nomination.
Our economy is strong, and our resilience is unquestioned. This unique strength continues to help give stability to the dollar’s value, despite overall struggles within the manufacturing sector. The ongoing decline in the manufacturing PMI, which fell to 48.7 in October from 49.1 in September, raises concerns about the future trajectory of economic growth. This continuing trough in manufacturing would be a ninth straight month of contraction, adding to the economic complexity.
The Role of Kevin Hassett
Kevin Hassett is your new “shadow chair.” And he seems to be engaged in back channel conversations about a possible nomination to replace Jerome Powell at the Federal Reserve. His insights and statements will be key to setting expectations with the market about the possible direction of U.S. monetary policy. Though unpredictable, even by his own admission, President Trump—if he’s honest with himself about what he wants America’s approach to economic management to look like—should nominate Hassett.
Depending on how he wields it, Hassett’s economic expertise may end up reinforcing or undermining the new dovish Fed action afoot. Market actors and economic politicians will be watching intently to see what he has to say about interest rates and inflation. This is critically important considering today’s economic metrics, including a third consecutive month of negative manufacturing activity.
Economic Indicators and Market Reactions
Even with the PMI data looking so dire, some industry experts contend that the U.S. economy is still healthy under the hood. The economy’s surprising resilience has so far prevented the dollar from falling more dramatically. At the same time, overall market sentiment is quickly turning into a risk-off mode. Investors have a tendency to flock to safe-haven assets in times of uncertainty—a dynamic that’s long been seen as benefitting the dollar. This picture becomes much more complex, and perhaps dangerous, under the leadership of President Trump.
The current market conditions have a distinct risk-off theme to them. Investor sentiment is skittish and investors are not taking on new risks, looking instead for a flight to safety assets. This type of behavior is always to the dollar’s advantage, increasing demand for dollar liquidity. The prolonged, self-imposed deathby-a-thousand-cuts decline in manufacturing shows that’s not nearly enough to keep it valuable over the long haul.
Bitcoin and Broader Market Trends
In a somewhat related development, Bitcoin has recently fallen below the line that many analysts viewed as an important support level. Some analysts are predicting that the price will get near its crisis bottom of $77,555. This recent low was seen on April 7, the exact day when these new tariffs went into effect. The uncertainty surrounding cryptocurrencies such as Bitcoin is indicative of wider uncertainties in financial markets.
As investors continue to chart a path through these uncharted waters, they are considering the impact of both fiat and cryptocurrency. The continuing reversal in the U.S. economy only deepens the challenge in making these calls.