High US Interest Rates May Have Triggered Housing Recession, Says Bessent

Parts of the US economy, particularly housing, may already be in recession due to high interest rates, according to US Treasury Secretary Scott Bessent. In an interview on CNN’s “State of the Union” program, Bessent reiterated his call for the Federal Reserve to accelerate rate cuts.

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

Bessent emphasized that while the overall US economy remains solid, high mortgage rates are still a significant hindrance to the real estate market. He noted that the housing sector is effectively in a recession, hitting low-end consumers the hardest because they have debts, not assets. According to the National Association of Realtors, pending home sales in the United States were flat in September.

The treasury secretary characterized the overall economic environment as in a transition period. Fed Chair Jerome Powell recently signaled that the central bank may not cut rates further at its December meeting, a move that has drawn sharp criticism from Bessent and other Trump administration officials.

Federal Reserve Governor Stephen Miran, who is on leave from his post as chairman of the White House Council of Economic Advisers, also expressed concerns in an interview with the New York Times. Miran, who dissented from last week’s Fed decision to lower interest rates by 25 basis points, argued for a cut of 50 basis points, or 0.5 percentage point.

“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,” Miran said. “I don’t see a reason to run that risk if I’m not concerned about inflation on the upside.”

Bessent echoed this sentiment, stating that the Trump administration’s cuts in government spending have helped lower the deficit-to-gross-domestic-product ratio to 5.9% from 6.4%, which should help reduce inflation. He argued that the Fed should continue to lower interest rates to support the economy.

“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 concluded.