A key economic advisor to President Donald Trump rejected on Monday the rumors of a recession derived from the uncertainty about the tariff policies of his administration, although a survey of US households showed that consumers are becoming more pessimistic about their perspectives and US actions collapsed.
In an interview with CNBC, Kevin Hasett, who directs the National Economic Council, said there were many reasons to be optimistic about the US economy, despite some predictions of a contraction in GDP in the first quarter and concerns about inflation.
Trump’s tariffs on Canada, China and Mexico were already having the desired effect of taking back the manufacturing and jobs to the United States, he said.
“There are many reasons to be extremely optimistic about the economy in the future. But, without a doubt, in this quarter, there are some irregularities in the data, ”said Hasett.
He explained that these figures derived from the time effects of the rapid implementation of Trump tariffs and what he called the “Biden inheritance.”
Trump and his team have repeatedly criticized the economy they inherited from Democrat Joe Biden. However, when Trump assumed the position in January, GDP growth had largely exceeded the trend for two years, consumer spending was solid and unemployment remained close to historical minimums.
Several recent indicators, however, have indicated a tendency to deceleration, and the monthly survey of consumer expectations of the New York Federal Reserve published on Monday concluded: “Households expressed more pessimism about their financial situation for next year in February, while expectations on unemployment, delinquency and access to credit deteriorated markedly.”
The percentage of households that expects the unemployment rate to be higher within a year reached its highest level since September 2023.
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Meanwhile, the GDPnow tracker of the Atlanta Federal Reserve, which is widely followed, suggests that the economy could contract in the first three months of the year, due in large part to a disproportionate drag of net trade.
Hasset said this would be a “very temporary phenomenon”, mainly driven by a historical tendency to stop investment after a great choice. This trend should be resolved this month, and tariff uncertainty should be cleared in April, he said.
In an interview with Fox News issued over the weekend, Trump refused to predict whether his economic policies, focused so far on a wave of tariff advertisements – some of which they have already entered into force and others are delayed or scheduled to be implemented later – would cause a recession.
The American stock markets, which were already in decline amid the concern for their erratic decision making about tariffs that most economists consider that they slow down the activity and fell inflation, suffered on Monday their greatest fall since Trump assumed the position.
The S&P 500, which reached a historical maximum in mid -February, dropped 2.7% and NASDAQ 4%. Both were at their lowest level since September.
“Trump was seen as the savior of the market, promising lower taxes and a less strict regulation. Now, his actions represent the omen of the perdition, ”said Dan Coatsworth, an investment analyst at AJ Bell in London.
“The word ‘recession’ is again on everyone’s lips while people ask if commercial tariffs will turn against them and lead to a recession instead of the economic prosperity of the US,” he added.
The S&P 1500 Supercomposite index, one of the largest measures of the US stock market, has lost almost 4.9 billion dollars in value since its historical maximum in mid -February.
‘Adverse tariffs’ assumptions’
Reuters surveys made to economists last week showed that the risks to the economies of Mexico, Canada and EU are accumulating in the midst of a chaotic implementation of US tariffs, which has generated a deep uncertainty between companies and decision makers. The polls showed that 70 of 74 economists surveyed in Canada, EU and Mexico considered that the risk of a recession had increased, and that the upward risks for inflation in the US had grown in particular.
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Goldman Sachs economists have reduced their growth forecast for USA in 2025 and have raised their inflation prognosis, “both due to more adverse assumptions about tariffs.”
They indicated that their growth estimate was now below the agreed figure for the first time in two and a half years.
Trump has imposed an additional tariff of 20% to Chinese goods entering the US, as well as 25% tariffs on imports from Canada and Mexico, although it suspended most of the rights over the neighboring countries of the US until April 2, when it plans to present a global regime of reciprocal tariffs for all commercial partners.
Hasett adopted an optimistic tone, arguing that the tax cuts in the US would boost the economy, increase the investment and improve real wages for the second quarter, compensating any negative impact of tariffs.
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“Just be careful (…) with conversations about recession,” he said. “What I think is going to happen is that the first quarter will barely manage to enter the positive category, and then the second quarter will take off when everyone sees the reality of tax cuts,” he said.
Austin Ramirez, president and executive director of the manufacturer of Husco hydraulic equipment, based in Waukesha, Wisconsin, was one of those who welcomed Trump’s campaign promises to boost tax cuts and regulatory reforms.
These measures are good for his business, Ramirez said, while tariffs and tariff threat are negative for his company.
“Now,” he said, “the concern is that everything bad is happening, and nothing good.”
With Reuters information
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