Claudia Sahm founded the Sahm recession indicator, which has predicted most recent economic contractions. She expressed concern that a Senate Banking hearing left her more confused than before, citing unclear answers and the need to navigate political pressures. Her worries are amplified by current political attacks on the Federal Reserve, including threats to fire Chairman Jerome Powell, legal cases involving Powell and Governor Lisa Cook, and public criticism from President Donald Trump. Despite the political context, Sahm was especially troubled by the nominee’s stance on forward guidance, reacting strongly to the statement that he does not believe in forward guidance. She contrasted this with the Fed’s decades-long shift toward transparent communication.
"“I felt like I was more confused about him after the [Senate Banking] hearing than before the hearing,” Sahm tells Fortune in an exclusive interview. “He didn't give clear, sharp answers, and part of that was trying to navigate the politics of the hearing, but the reality is he's going to be Fed chairman.”"
"Concerns relating to Warsh come with a caveat: They are situated in the context of politics at this moment. Alarm is relatively high after President Donald Trump has persistently sought to influence the path of monetary policy, launching unprecedented attacks on the Fed and its personnel in the process. The Oval Office has threatened to fire current Chairman Jerome Powell; a legal case has been brought against him, and another has been brought against Board Governor Lisa Cook."
"Nonetheless, the contents of Warsh's testimony still raised eyebrows in some quarters-namely, his views on forward guidance. What baffled Sahm the most was the definiteness of his statement: “I don't believe in forward guidance.” “I almost fell out of my chair,” Sahm said. “Over the past 20 years, the Federal Reserve has moved to much more transparent communication ... it does have a tool aspect, but also the communication, the press conferences, were a”"
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