- It’s a far-reaching message just weeks before the midterm elections: The administration wants to promote strong growth without appearing to ignore Americans’ frustration with the cost of living.
- “If I say, ‘Oh, people are wrong, the economy is great,’ then I look like I’m insensitive. And if I then look at why the economy is great, then it looks like I’m insensitive,” White House economist Kevin Hassett said Sunday on CNN’s “State of the Union.”
What they say: “What we’re not going to do is do what Biden’s people did and tell the American people how well they did it,” Bessent told Axios’ Mike Allen Friday in a wide-ranging interview on “The Axios Show.”
- Bessent said the economy remained strong despite the recent surge in inflation. “All the numbers are pretty strong except for headline inflation,” which includes energy prices driven by the Middle East conflict. He predicted that the energy shock would “ease.”
- He acknowledged that Americans still face the cumulative consequences of rising prices: “Sometimes I feel like an emergency room doctor. … The American people have been propped up by Mack Truck inflation.”
- The Treasury secretary said wages that keep pace with inflation are now not enough to compensate for previous erosion of purchasing power. “After what happened during the Biden years, our goal is not to break even.”
Yes, but: The administration still wants credit for the economy’s strength on paper, even though leading economic indicators obscure the financial strain Americans still feel.
- “There’s a stated preference and a revealed preference,” Bessent said, referring to Americans’ spending behavior versus their low sentiment.
The other side: “What we did was say, ‘Hey, we know you’re struggling and we’re trying to help you with pricing, but look at that great GDP or employment report!’ It spoke beyond people,” Jared Bernstein, former White House chief economist under Biden, told Axios in an email.
- “What they say most often is: ‘You’re not in trouble! And the economy is booming.” This also speaks beyond the people.”
- Bernstein argued that the administration has not only brushed aside affordability problems — Trump called the affordability crisis a “hoax” last year — but made them worse with tariffs, budget cuts and war.
The big picture: The bond market is complicating the administration’s affordability efforts as long-term interest rates rise sharply and mortgage rates exceed 7%.
- Bessent has made lower Treasury yields a pillar of the administration’s affordability policy. A speech he gave last year included a section titled “Treasury Markets as a Barometer of Affordability.”
- Speaking to Axios, Bessent downplayed the signal from the recent rise in yields, pointing out that borrowing costs have been climbing around the world.
- “I would be concerned if we experienced some sort of idiosyncratic uptick,” he said. “There has been a global increase.”
What to watch: The Treasury Secretary acknowledged the limits of his influence on the bond market after his intervention this summer.
- “I can’t control the bond market,” he said. “What I can do is try to get people to slow down and think.”
- Bessent said he doesn’t regret saying last month that “I’m home now,” a reference to his informational advantage on Wall Street. “The house doesn’t win every hand. It plays on percentages.”
Go further: Watch Scott Bessent’s extended interview on “The Axios Show”
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