Treasury Secretary Scott Bessent has called for a strategic "rebalancing" of the U.S. economy, moving away from an era characterized by fiscal and monetary largesse. This announcement comes amidst a backdrop of market volatility and economic uncertainty, as major averages slid again on Monday. Recent assurances from the White House have done little to calm jittery market nerves, which have been on edge due to fluctuating economic indicators.
In the labor market, there is a discernible shift with the number of full-time workers decreasing by 1.2 million, while those working part-time surged by 610,000. The increase in part-time jobs for economic reasons rose by 460,000, marking a 10% increase to the highest level since May 2021. The so-called real unemployment rate has escalated to 8%, up half a percentage point to its highest level since October 2021. These figures underscore concerns about the labor market's current trajectory and its potential impact on economic growth.
Commerce Secretary Howard Lutnick remains optimistic, stating confidently, "There's going to be no recession in America." He emphasizes that the Trump administration's strategies are geared towards long-term economic growth despite short-term challenges.
"There's going to be no recession in America…. If Donald Trump is bringing growth to America, I would never bet on recession, no chance." – Howard Lutnick
However, not all economic forecasts are as optimistic. Goldman Sachs has revised its GDP outlook for 2025, lowering it to 1.7%, down half a percentage point from previous forecasts. Additionally, the probability of a recession within the next 12 months has been adjusted upwards to 20% from 15%. The Atlanta Federal Reserve's GDPNow gauge indicates a potential 2.4% decline in the growth rate for the first quarter. These projections raise alarms about possible negative growth in the near term.
A significant factor contributing to economic concerns is the record surge in the trade deficit, which reached $131.4 billion in January. This increase was driven in part by a jump in gold imports and companies stockpiling ahead of anticipated tariffs. President Trump remains steadfast in his commitment to strengthening the American economy.
"We're bringing wealth back to America. That's a big thing…. It takes a little time, but I think it should be great for us." – President Trump
Despite these challenges, President Trump and his administration officials insist that the current economic conditions are part of a broader strategy designed to bring wealth back to America. They argue that this transitional phase is necessary for achieving long-term prosperity.
"Look, we're going to have disruption, but we're OK with that." – President Trump
Kevin Hassett, a key economic advisor, echoes this sentiment by highlighting the underlying bullish prospects for the economy despite recent downturns.
"There are a lot of reasons to be extremely bullish about the economy going forward," – Kevin Hassett
He acknowledges some short-term disruptions in economic data but attributes these to external factors like the Biden inheritance and timing effects related to tariffs.
"But for sure, this quarter, there are some blips in the data, including the negative GDPNow, which are related both to the Biden inheritance and to some timing effects that are happening ahead of tariffs." – Kevin Hassett
Consumer activity, which constitutes more than two-thirds of GDP, remains a critical area of concern. Any further decline in consumer spending could exacerbate current economic challenges.
Scott Bessent emphasizes the necessity of transitioning from public to private spending as part of this economic rebalancing effort.
"There's going to be a natural adjustment as we move away from public spending to private spending," – Scott Bessent