Trump says 'Stupidity causes inflation' and threatens to stop trade with foreign countries in retaliation for higher interest rates

President Donald Trump spent Friday turning a better-than-expected jobs report into a fresh argument with markets, the Federal Reserve and America’s trade partners. The August number — a gain of 162,000 jobs — was supposed to be the sort of news he’d welcome. Instead, he used the Oval Office to lash out at the idea that more hiring can stoke inflation, calling that “crazy” and saying, “Success does not cause inflation. Stupidity causes inflation.”

That was a sharp change in mood from the promise he has been selling for months: a fast, Trump-driven boom. Back in August 2024, he told a North Carolina rally that a victory would immediately kick off “a brand new Trump economic boom.” So far, the economy has been growing at roughly 2% a year, slower than during the Biden administration, while hiring has softened and prices have stayed sticky.

Trump’s bigger target on Friday was interest rates. He blamed higher borrowing costs for U.S. government debt and said on social media that America could respond by stopping trade with foreign countries. The 10-year Treasury note rose to 4.79% on Friday, and the national debt has crossed $40 trillion. Rates have been climbing as inflation stays elevated, with Trump’s tariffs and oil shortages from the Iran war both part of the picture in the source.

The White House is trying to sell a different story. Officials are pointing to artificial intelligence, tariffs, tax cuts and fraud-fighting as reasons to expect stronger growth. Christopher Phelan, who chairs the White House Council of Economic Advisers, said he expects higher growth and argued that recent job gains have been about twice what’s needed just to keep up with population growth. But even he acknowledged that growth alone may not solve the government’s money problems.

That’s the catch Trump keeps running into. The administration’s own economic credibility has taken a hit, according to RSM US chief economist Joe Brusuelas, because the promises have outrun the results. And if the Fed cut rates the way Trump wants, more money could flow into the economy and make inflation worse. Trump brushed off that risk anyway, saying GDP could grow at “12, 13, 14, 15%” with lower rates and insisting the country could hit record growth.