At a recent CNN “State of the Union” interview, Treasury Secretary Scott Bessent warned that parts of the U.S. economy—especially the housing market—may already be sliding into recession because of high interest rates. He asked the Federal Reserve to speed up rate cuts to relieve the pressure on borrowers.
Bessent said that the overall economy still looks solid, but mortgage rates have risen to levels that are stalling home sales and hurting low‑income buyers who carry more debt than assets. He called the current environment “a transition period” and urged the Fed to act before the housing slide turns into a broader slowdown.
Meanwhile, Fed Chair Jerome Powell hinted last week that the central bank might not cut rates further at its December meeting. Bessent and other Trump‑era officials slammed the move, saying that keeping policy tight for too long could actually spark a recession.
Fed Governor Stephen Miran, who is temporarily away from his White House role, agreed. In a New York Times interview, he warned that the Fed could trigger a recession if it fails to lower rates quickly enough. Miran was one of two governors who opposed last week’s 25‑basis‑point cut and instead pushed for a 50‑basis‑point reduction. He said, “If you keep policy this tight for a long period of time, then you run the risk that monetary policy itself is inducing a recession.”
The Treasury’s policy approach mirrors that view. Bessent highlighted the Trump administration’s spending cuts, which lowered the deficit‑to‑GDP ratio from 6.4 % to 5.9 %. He believes that a smaller deficit helps bring down inflation, which in turn would justify Fed rate cuts. “If we are contracting spending, then I would think inflation would be dropping. If inflation is dropping, then the Fed should be cutting rates,” Bessent explained.
Data from the National Association of Realtors shows pending home sales in the U.S. were flat in September, underscoring the impact of the high mortgage rates. The slowdown hits low‑end consumers hardest because their debt loads exceed their asset holdings.
In short, Treasury Secretary Bessent and Fed officials are calling for a faster pace of rate cuts. They argue that waiting could stall the housing market, push more people into financial distress, and risk turning the Fed’s tight policy into a self‑inflicted recession. The message is clear: lower rates now, pause inflation, and protect the housing sector that remains a critical part of the U.S. economy.
Source: New York Post
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