×

Gary Cohn will be bringing worries about Fed policy to Trump's White House

With Gary Cohn as one of his top economic advisors, Donald Trump can expect to hear from an economic optimist leery of the role central banks have taken on to try to engineer growth.

The Goldman Sachs president and chief operating officer would bring yet another insider's view to a Trump White House as director of the National Economic Council. The position is central to generating a unified economic message for the administration.

In interviews over the past couple of years, Cohn, 56, has expressed some confidence in the economy. Speaking to CNBC eight days after Trump's stunning upset of Hillary Clinton in the presidential race, Cohn also was cautious on certain aspects.

"We're all giving President-elect Trump and his transition team the benefit of the doubt," he said. "We're all listening to what he's saying, we're all listening to what he's doing. We're all cautiously optimistic. We're waiting to see what happens. As we get more clarity, the markets will react."

Indeed, the markets have reacted, and quite positively.

Gary D. Cohn, president and chief operating officer of Goldman Sachs Group
Jason Alden | Bloomberg | Getty Images
Gary D. Cohn, president and chief operating officer of Goldman Sachs Group

The Dow industrials are up about 7.5 percent since the day after the election, and the KBW Nasdaq Bank Index has soared more than 22 percent. Cohn's Goldman Sachs has surged even more, up close to 30 percent.

Still, few believe the road ahead will be smooth as Trump's unpredictability always looms.

Cohn has expressed considerable worry over the past couple of years about central bank policy. He has recognized the need for the emergency measures the Fed and others have taken, but has wondered about the ramifications further into the future.

When the discussion turned to bond rates, Cohn said: "I am building the case for rates going up for the right reasons. That said, I am concerned how much U.S. rates can dislocate from the rest of the world, and I think that's a big issue."

Indeed, the U.S. central bank has been talking about tightening policy at a time when most of its global counterparts are in loosening mode.

Cohn worries that will result in a much stronger dollar that could slow the U.S. recovery.

"The reality of the world is we have a soaring dollar and the effects on that soaring dollar are just starting to be felt," he said during a March 15, 2015, interview. "It's going to make U.S. exports more expensive. So what does that mean for U.S. manufacturers and what does that mean for U.S. jobs? It's not going to be positive."

The market also has been impacted by low rates and too much regulation he said in another interview.

"I won't say markets are broken. I think they're not as efficient as they should be," Cohn told CNBC on June 23, 2015.

"It's the cumulative effect when you look at regulation. No one regulation by itself has had a bad effect. In fact, many of the regulations have had positive effects. It is the cumulative effect of many of the regulations that we put on the market community that have had an effect on the market."