The US economy is shrinking according to comments from these two senior Trump officials.
US Treasury Secretary Bessent:
- the impact of the government shut down on the economy is getting worse and worse
- expects prices to come down over the months ahead
(note, in a recession prices will tend to fall, or at least not rise so quickly, yes)
Trump key economic advisrer and candidate for Fed Chair Hasset:
- economic growth could be negative in the fourth quarter if the shut down drags on
(note, if negative economic growth persists for two quarters in a row that is the commonly accepted definition of an economic recession)
Bessent and Hassett are doing a couple of things here
- softening the public up for bad news on the economy in the months ahead
- seeking to blame others, not the administration they are key members of, for a possible recession in the US
For markets recessions are not good news, but the lower rates that usually result are tailwinds for risk assets.
