U.S. Treasury Secretary Bessant said on Sunday that the 43-day government shutdown caused $11 billion in permanent damage to the U.S. economy, but he was optimistic about the economic growth outlook for next year due to lower interest rates and tax cuts .
In a television interview, Bessant stated that interest rate-sensitive sectors of the U.S. economy, including real estate, have already entered a recession, but he believes that the overall U.S. economy is not at risk of falling into negative growth .
He attributed inflation to the service economy, rather than President Trump’s broad tariffs—reiterating a long-held view of the Trump administration—and added that he expects falling energy prices to more broadly drag down overall prices.
Recent data shows a slowdown in U.S. manufacturing activity as import tariffs drive up prices and dampen demand. A consumer survey released by the University of Michigan last Friday also showed that consumers are frustrated with rising prices.
Nevertheless, Bessant remains optimistic about the U.S. economic outlook. "I am very, very optimistic about 2026. We have laid the foundation for strong and inflation-free economic growth," he said.
He pointed out that energy prices fell in October, housing sales rose, and the government is still working to reduce inflation—currently at 3%.
Bessant stated that last week's reduction in import tariffs on food items such as bananas and coffee was the result of a trade agreement reached after months of negotiations.
“Inflation is a complex metric, and we take all factors into account, so we are working to keep prices down in areas we can control,” he added.
Bessant also stated that several policy adjustments will increase the real income of American workers and help offset the impact of rising costs, including capping overtime pay taxes, cutting tip taxes, and Social Security taxes for some groups.
He added that, thanks to the tax rate adjustment, taxpayers will receive a substantial federal tax refund in the first quarter of 2026.
Bessant also said the Trump administration plans to announce an initiative this week aimed at reducing healthcare costs—echoing comments made last week by a senior White House official, though he did not provide specific details.
Bessant said a series of trade agreements would also help boost economic growth, and he expects new factories to start operations across the country.
White House National Economic Council Director Kevin Hassett also said on Sunday that he expects 2026 to be an “absolutely strong year,” despite a “minor setback” in the economy in the fourth quarter of this year due to the longest government shutdown in history.
He stated that his economic growth forecast for the fourth quarter has been halved, with growth expected to be between 1.5% and 2%, and that increased manufacturing employment is expected to drive the outlook for 2026.
(Article source: CLS)
