Treasury’s Bessent warns of sectoral recessions without more Fed cuts

[President Trump Meets With Visiting Argentine President Milei At The White House]

Some areas of the U.S. economy are already contracting, and others could soon follow if the Federal Reserve doesn’t continue easing policy, Treasury Secretary Scott Bessent said Sunday in an interview with CNN.

Despite overall economic growth, estimated near 4% in recent quarters, administration officials continue to warn of underlying weakness. The message aligns with growing pressure on the Fed to accelerate rate reductions.

The central bank lowered interest rates on Wednesday but surprised investors by signaling that another cut in December isn’t guaranteed. Markets had largely priced in an additional move, with odds of a December reduction previously near 100%.

Asked by CNN’s Jake Tapper whether the economy could slide into recession if rate cuts pause, Bessent replied:

“I think we are in good shape, but I think that there are sectors of the economy that are in recession … The Fed has caused a lot of distributional problems with their policies.”

He added that lowering rates further could help ease what he described as a “housing recession” and support lower-income households burdened by debt. Without that, he warned, the risk of broader economic slowdown would grow.

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