No recession risk for overall US economy despite $11bn shutdown hit

US Treasury Secretary Scott Bessent said Sunday that the recent 43-day government shutdown dealt a permanent $11 billion blow to the economy, but he remained optimistic about growth heading into next year, citing falling interest rates and newly enacted tax cuts.

Speaking on NBC’s Meet the Press, Bessent said interest-rate-sensitive sectors such as housing had already experienced recession-like conditions, but he did not expect the broader U.S. economy to slip into negative growth.

He attributed inflation pressures mainly to the services sector rather than President Donald Trump’s tariff policies, reiterating the administration’s long-standing position. Bessent added that declining energy prices should help cool inflation further.

Trump has recently intensified his focus on affordability following Democratic gains in state and local elections and sinking approval ratings—now at 38%, the lowest since his return to office, according to a Reuters/Ipsos poll.

Despite signs of weakening U.S. factory activity and consumer frustration over high prices, Bessent maintained a positive outlook. “I am very, very optimistic on 2026,” he said, predicting strong, non-inflationary growth. He noted that energy prices fell in October and home sales rose, while annual inflation currently stands at 3%.

Bessent also pointed out that inflation is 0.5% higher in Democratic-led states than Republican-led ones, which he attributed to heavier regulation.

Hassett predicts “Blockbuster” 2026

National Economic Council Director Kevin Hassett told Fox News that he expects 2026 to be “an absolute blockbuster year,” though he warned of a “hiccup” in the fourth quarter of this year due to the prolonged shutdown. He forecast 1.5%–2% growth in Q4 and a rise in manufacturing jobs to set the stage for stronger expansion in 2026.

Bessent noted that recent tariff cuts on food imports such as bananas and coffee stemmed from trade deals months in the making. “We are trying to push down the things we can control,” he said.

Trump last week signed legislation ending the longest government shutdown in U.S. history, extending funding through January 30 and setting up another potential partisan battle next year.

Bessent said Republicans should vote to end the Senate filibuster if Democrats trigger another shutdown—an idea Trump also supports—though he avoided commenting on whether enough votes exist.

He added that new policies capping taxes on overtime, reducing taxes on tips and Social Security for some workers, and making auto loans tax-deductible would boost real incomes for Americans struggling with higher prices. He also said many taxpayers could expect large refunds in early 2026 as new tax rates take effect.

Bessent confirmed that the administration plans to unveil a healthcare cost-reduction initiative this week, though he offered no details. He also said new trade deals would spur investment and new plant openings across the country.