US Economy Showing Signs of Recession in Housing, Treasury Secretary Says

Parts of the US economy, particularly the housing sector, may already be in recession due to elevated interest rates, Treasury Secretary Scott Bessent stated today, renewing his call for the Federal Reserve to accelerate interest rate cuts.

Speaking on CNN’s “State of the Union” program, Bessent acknowledged the overall US economy remains solid but highlighted the ongoing struggles within the real estate market. He specifically noted that housing is “effectively in a recession” disproportionately impacting lower-income consumers burdened by debt. Recent data from the National Association of Realtors showed pending home sales were flat in September, indicating continued stagnation.

Bessent argued that the Federal Reserve’s policies have created “distributional problems” and that declining government spending – which he said lowered the deficit-to-GDP ratio from 6.4% to 5.9% – should contribute to lower inflation, allowing the Fed room to reduce rates. “If we are contracting spending, then I would think inflation would be dropping. If inflation is dropping, then the Fed should be cutting rates,” he said. This comes after Fed Chair Jerome Powell signaled last week that further rate cuts at the December meeting are not guaranteed, a move that drew criticism from Bessent and other former Trump administration officials. The Federal Reserve has been closely watched for its monetary policy decisions.

Echoing Bessent’s concerns, Fed Governor Stephen Miran, currently on leave from the White House Council of Economic Advisers, warned in a New York Times interview that maintaining tight monetary policy risks inducing a recession. “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 stated. Officials indicated they will continue to monitor economic data closely as they assess future policy adjustments.