Treasury Secretary Scott Bessent on Friday acknowledged some signs of weakness in the US economy.
“Could we be seeing that this economy that we inherited starting to roll a bit? Sure. Look, there's going to be a natural adjustment as we move away from public spending to private spending,” Bessent said in an interview on CNBC.
“The market and the economy have just become hooked, and we've become addicted to this government spending, and there's going to be a detox period,” he said.
Describing the economy as inherited is a reference to the administration under then-President Joe Biden.
Under Biden, the US saw generally strong economic growth. However, there were signs of a slowdown in late 2024, and inflation remained above the Federal Reserve’s 2% target.
In its first few months, the Trump administration has taken steps to reshape global trade policies and to reduce the federal workforce. There has not been much hard economic data reflecting President Donald Trump’s term, though consumer surveys have shown a decline in confidence.
One area where Trump’s policies could be felt quickly are tariffs. The president has hit Canada, Mexico and China with tariffs in his first nearly two months in office, though the Canada and Mexico efforts now have a lengthy list of exemptions. The administration plans to implement broader tariffs in April.
“Tariffs are a one-time price adjustment,” Bessent said, pushing back against the idea that tariffs would fuel continued inflation.
Bessent also said the administration was “not getting much credit” for areas where costs have fallen since Trump’s inauguration, such as oil prices and mortgage rates.
Investors looking for Trump to use policy to stop the stock market from falling are likely to be disappointed, Bessent said.
Though stocks initially popped when Trump was elected last November, the market has given up all of its gains since then. The Dow Jones Industrial Average is off about 2% since the inauguration in volatile trading that has seen markets surge and swoon depending on the headlines of the day.
There’s been some talk of a “Trump put” in which the president might try to intervene to support the market, but Bessent rejected that notion during the interview on CNBC.
“There’s no put,” he said. “The Trump call on the upside is, if we have good policies, then the markets will go up.”
Puts and calls are terms used in the options market. A put gives the holder the option to buy at a predetermined level while a call allows the holder to sell at the level. In policy parlance, a put would imply that Trump would try to stop market selling at some point.
During his first term in office, Trump watched the stock market closely and used it as a barometer to judge his economic performance. In recent days, Bessent has said the administration is looking less at stock prices and more at bond yields as a measure that inflation pressures are easing and the market outlook is better calibrated toward the administration’s views.
The 10-year Treasury yield has plunged lately, down more than half a percentage point from its mid-January peak.
