Treasury Secretary Scott Bessent said Sunday he believes some sectors of the economy are in a recession or at risk of one, blaming the Federal Reserve for not cutting interest rates fast, just one day after newly appointed Federal Reserve Governor Stephen Miran warned of high interest rates triggering a recession in an interview with The New York Times.
In an interview with CNN’s “State of the Union” on Sunday, Bessent said he believed the economy was in a “transition period,” noting that the Trump administration has cut government spending, which he blamed for high inflation after the COVID-19 pandemic.
Bessent told CNN’s Jake Tapper he believes “we are in good shape,” despite some sectors of the economy being “in recession,” which he blamed on Federal Reserve policies.
The treasury secretary gave the housing market as an example, insisting “if the Fed brings down mortgage rates, they can end this housing recession.”
The status of the economy remains largely unclear based on available data, since the Bureau of Labor Statistics stopped collecting and publishing data during the ongoing government shutdown.
Is the housing market in a recession?
The housing market is showing some signs of a recession, according to experts who spoke to the Wall Street Journal in August and real estate agents who cited a slow environment for sales when speaking to The New York Times in July. However, existing home sales rose 1.5% in September after stalling earlier this year, according to data from the National Association of Realtors, with sales growing in every region except the Midwest. The group’s chief economist credited this rise in sales to lower mortgage rates, echoing Bessent’s remarks Sunday. However, Oxford economists who spoke to Reuters said they expected sales to move “sideways” until the economy and labor market also improve. Consumer confidence about the economy and the availability of jobs remains low, according to recent polling.
Key background
The Federal Reserve cut interest rates by a quarter of a percentage point last Wednesday, the second time in two months. Since taking office in January, President Donald Trump has called for more aggressive rate cuts, and criticized the Fed’s Chair Jerome Powell for interest rates remaining stable for the first nine months of the year. Miran, who Trump appointed to the Board of Governors in August, was one of only two dissenting voices at the Fed’s meeting Wednesday, and instead called for a much larger half percentage point reduction. Despite the pressure from Trump and Miran, Powell said another rate cut was “not a foregone conclusion” at the Fed’s last meeting of the year, in December. The other dissenting vote Wednesday came from Kansas City Fed president and CEO Jeffrey Schmid, who argued against cutting rates at all.
This article was written by Zachary Folk from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.