Presidential Rhetoric and the Federal Reserve

Presidents persistently use their rhetoric as a mechanism of influence over salient policies. As the economy has become more salient, presidents have tried to gain a semblance of control over its direction and robustness. Yet, there exists no substantial research regarding whether the rhetoric is influential with the most important economic actors such as the Federal Reserve. Assessing whether presidential cues and signals shape the Fed’s economic behavior provides an assessment of rhetoric’s effect. Utilizing the economic speeches from D.D. Eisenhower through B.H. Obama this paper questions whether the Fed’s behavior modeled what the presidents wanted. Presidents have increased their rhetoric on the economy significantly. However, the increased rhetoric and attention to the economy have not brought about that which presidents have sought. The results suggest that it is more likely that the Federal Reserve is paying attention to Congress and/or the economic indicators rather than the rhetoric of the president