The White House pushed back against growing recession fears on Monday, as a top economic adviser defended President Donald Trump’s tariff policies despite plunging U.S. stocks and rising household concerns.
Kevin Hassett, head of the National Economic Council, told CNBC that the U.S. economy remains strong despite predictions of a first-quarter contraction and mounting inflation concerns. “There are a lot of reasons to be extremely bullish about the economy going forward. But for sure, this quarter, there are some blips in the data,” Hassett said, attributing fluctuations to the rapid implementation of tariffs and what he called the “Biden inheritance.”
A survey released Monday by the New York Federal Reserve found that U.S. households are increasingly pessimistic about their financial future, with expectations for higher unemployment reaching their highest level since September 2023. The Atlanta Federal Reserve’s GDPNow tracker projects economic contraction in the first quarter, largely due to a trade-driven drag.
Trump declined to predict whether his trade-focused policies—centered on a flurry of tariff announcements—would tip the economy into recession. U.S. stock markets reflected investor anxiety, with the S&P 500 plummeting 2.7% and the Nasdaq dropping 4% to their lowest levels since September.
“Trump was seen as the market’s savior, promising lower taxes and deregulation. Now, his actions represent the harbinger of doom,” said Dan Coatsworth, investment analyst at AJ Bell. “The ‘R’ word is back on everyone’s lips as people question whether tariffs will backfire and lead to recession instead of prosperity.”
The S&P 1500 Supercomposite Index, a broad measure of the U.S. stock market, has shed nearly $4.9 trillion in value since its mid-February peak.
Recent Reuters polls indicate rising recession risks across North America, with 70 of 74 economists surveyed in the U.S., Canada, and Mexico reporting increased economic uncertainty. Goldman Sachs has downgraded its 2025 U.S. growth forecast and raised its inflation projection, citing “more adverse tariff assumptions.”
Trump’s tariff policy has included a 20% levy on Chinese imports and a 25% tariff on Canadian and Mexican goods, though most duties on U.S. neighbors are suspended until April 2, when a broader reciprocal tariff regime is expected.
Hassett maintained an optimistic stance, arguing that tax cuts would boost investment and real wages, offsetting any tariff-related downturns. “Just be very wary of conversations about recession,” he said. “I believe the first quarter will barely stay in positive territory, and the second quarter will take off as the benefits of tax cuts materialize.”
While Trump’s tax and regulatory policies have received support from some business leaders, concerns over tariffs persist. Austin Ramirez, CEO of hydraulic equipment maker Husco, noted that while tax cuts and deregulation have been beneficial, trade policies pose a significant threat.
“Now the worry is that it’s all the bad stuff happening, and none of the good stuff,” Ramirez said.
