Treasury Secretary Scott Bessent said Sunday that he believes some sectors of the economy are in recession or at risk of being so, blaming the Federal Reserve for not cutting interest rates quickly, just a day after newly appointed Fed Governor Stephen Miran warned that high interest rates would trigger a recession in an interview with The New York Times.
Key data
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 had cut government spending, which he attributed to high inflation after the COVID-19 pandemic.
Bessent told CNN’s Jake Tapper that he believes “we’re in good shape,” even though some sectors of the economy are “in recession,” which he attributed to the Federal Reserve’s policies.
The Treasury Secretary gave the housing market as an example, insisting that “if the Federal Reserve lowers mortgage rates, they can end this housing recession.”
What we don’t know
The state of the economy remains largely uncertain based on available data, as the Bureau of Labor Statistics stopped collecting and publishing data during the ongoing government shutdown.
Is the real estate market in recession?
The housing market is showing some signs of recession, according to experts who spoke to the Wall Street Journal in August and real estate agents who cited a slow sales environment when they spoke to The New York Times in July. However, existing home sales rose 1.5% in September after stagnating 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 attributed this increase in sales to lower mortgage rates, echoing Bessent’s remarks on Sunday. However, Oxford economists who spoke to Reuters said they expected sales to remain stable until the economy and labor market also improved. Consumer confidence in the economy and job availability remains low, according to recent surveys.
Key information
The Federal Reserve cut interest rates by a quarter 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 Fed Chair Jerome Powell for keeping interest rates steady through the first nine months of the year. Miran, whom Trump appointed to the Board of Governors in August, was one of only two dissenting voices at Wednesday’s Fed meeting, instead calling for a much larger cut of half a percentage point. Despite pressure from Trump and Miran, Powell said another rate cut was “not a foregone conclusion” at the last Fed meeting of the year, in December. The other dissenting vote on Wednesday came from Kansas City Federal Reserve President and CEO Jeffrey Schmid, who argued against cutting rates at all.
This article was originally published by Forbes US.
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