I have always felt that the probability of an economic recession is not determined by the Federal Reserve Chairman, but rather by inflation. The Fed's responsibility is to maintain inflation at 2% and maximize employment. Between these two goals, the Fed actually has little discretion; it is more like it is "forced" to make choices under established economic conditions, rather than actively deciding the direction of the economy.

If inflation is sticky and consistently above 2%, regardless of who the chairman is, the Fed must choose to maintain high interest rates or even continue tightening. If high interest rates persist long enough, corporate financing costs will rise, consumption will weaken, and credit will contract, leading to a natural recession. This is not a matter of whether the chairman wants it or not; it is inflation pushing them to drive the economy into a contraction zone.

Conversely, if inflation falls rapidly or even approaches 2%, the Fed has no reason to maintain extremely high interest rates, as the employment side will begin to feel pressure, the interest burden on the fiscal side will increase, and stress in the banking system will accumulate. In such an environment, regardless of whether the chairman is hawkish or dovish, they must choose to cut interest rates to avoid a hard landing for the economy.

Therefore, what truly determines an economic recession is the path of inflation and the duration of interest rates, rather than who sits in the chairman's position. The chairman can change market expectations and communication methods, but cannot alter the mathematical structure of the economic cycle itself. The structure of inflation determines the policy path, and the policy path determines the economic cycle.

Of course, there is an exception this time, and that is Trump.

Trump will be the biggest variable in this cycle. In front of Trump, votes and celebrity relationships are the most important; the only thing he cares about is pushing the economy to a seemingly prosperous peak during his term. To achieve this goal, he can disregard the constraints of traditional economics, long-term fiscal stability, and the independence of the Federal Reserve.

If inflation rises again, he will not worry about monetary policy lagging behind like traditional presidents. Instead, he will pressure, publicly name, and replace disobedient officials, forcing the Fed to prioritize stimulating the economy rather than controlling inflation. This time, Hassett plays such a role.

If signs of an economic recession appear, he will be more willing to adopt extreme policies, including aggressively pushing for tax cuts, expansionary fiscal measures, trade barriers, currency pressure, and even directly intervening with the Fed to ensure that interest rates must come down.

Thus, during Trump's presidency, the probability of an economic recession is no longer simply determined by the traditional chain of inflation path to interest rate duration to economic activity, but is influenced by uncontrollable factors, namely Trump's political demands.

In the traditional framework, the Fed is pushed by inflation, but in the Trump era, the Fed may be pushed by the president.

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