U.S. Treasury Secretary Scott Bessent said parts of the U.S. economy may already be in a recession due to still-elevated interest rates.
Bessent made the comments on CNN’s ‘State of the Union’ program on Sunday. The statement comes on the heels of the Federal Reserve’s recent quarter-point interest rate cut, only the second reduction this year.
“I think that we are in good shape, but I think that there are sectors of the economy that are in recession,” said Bessent, per Reuters. “And the Fed has caused a lot of distributional problems with their policies.”
The Treasury Secretary stated that the U.S. economy remains solid; however, relatively high mortgage rates persist, which continue to challenge the real estate market. According to Bessent, low-end consumers are being hit the hardest by elevated rates, as they tend to hold debt.
The Dallas Express recently reported that Citibank dropped its base lending rate by 0.25%; however, it remains at a still lofty 7.00%.
In September, pending home sales nationwide remained flat, according to data from the National Association of Realtors.
While the Fed initially signaled that three rate cuts would occur in 2025, Federal Reserve Chair Jerome Powell last week indicated that the central bank may delay further cuts at next month’s meeting. The revelation prompted criticism from Bessent and others in the Trump administration.
In an interview published in Saturday’s edition of the New York Times, Federal Reserve Governor Stephan Miran warned the Fed could trigger a recession if it did not sufficiently lower rates quickly enough. Like President Trump, Miran has been urging the central bank to lower rates more aggressively, which skyrocketed during the pandemic.
“If you keep policy this tight for a long period of time, then you run the risk that monetary policy itself is inducing a recession,” Miran said in the interview. “I don’t see a reason to run that risk if I’m not concerned about inflation on the upside.”