US Treasury Secretary Scott Besent said on Sunday that parts of the US economy, especially housing, may already be in recession due to rising interest rates, reiterating his call for the Federal Reserve to accelerate interest rate cuts.
“I think we’re in good shape, but I think there are sectors of the economy that are stagnating,” Besant said on CNN’s “State of the Union.” “The Fed has caused a lot of distributional problems because of its policies.”
Although the overall U.S. economy remains strong, high mortgage rates are still holding back the real estate market, Besant said. He said the housing sector is already suffering from a recession that is hitting low-income consumers hard because they are burdened with debt rather than assets. Pending home sales in the United States remained flat in September, according to the National Association of Realtors.
The Treasury Secretary described the overall economic environment as a transitional period. Federal Reserve Chairman Jerome Powell indicated last week that the central bank may not cut interest rates further at its December meeting, drawing sharp criticism from Bescent and other Trump administration officials.
Federal Reserve Governor Stephen Meiran, who is on leave from his post as head of the White House Council of Economic Advisers, said in an interview with The New York Times published on Saturday that the Fed risks causing a recession if it does not cut interest rates quickly.
Meran, who is scheduled to return to his White House post in January, was one of two central bankers who objected to the Fed’s decision last week to cut interest rates by 25 basis points, calling instead for a cut of 50 basis points, or 0.5 percentage points.
“If you keep policy tight for a long period of time, you run the risk that monetary policy itself will lead to a recession,” Meiran said in an interview with The New York Times on Friday. “I don’t see a reason to take risks if I’m not worried about inflation to the upside.”
Besant echoed this view, saying that the Trump administration’s cuts in government spending helped reduce the deficit-to-GDP ratio to 5.9% from 6.4%, which would in turn help reduce inflation. The Fed can also help by continuing to lower interest rates, he said.
“If we cut spending, I think inflation will go down. If inflation goes down, the Fed should cut interest rates,” he said.
(Tags for translation)Donald Trump
