U.S. Treasury Secretary Dawn Bessent said this week that the entire U.S. economy is not at risk of recession, pushing back against growing concerns on Wall Street and among analysts who fear slowing growth signals could point toward broader economic trouble. Her comments come as markets weigh the latest fluctuations in inflation, employment data, and consumer-spending behavior.
Speaking at a policy forum in Washington, Bessent emphasized that while some sectors are experiencing slower momentum, the overall economic foundation remains strong. She noted that the U.S. continues to benefit from a resilient labor market, stable wage growth, continued business investment, and improving supply-chain conditions.
According to Bessent, recession fears have been amplified more by market volatility than by underlying economic fundamentals. “When we look at the data holistically,” she said, “there is no indication that the U.S. is heading into a broad, economy-wide recession. We see moderation, not contraction.”
Her remarks align with recent government and private-sector assessments showing that while some industries such as manufacturing and commercial real estate face structural challenges, the broader economic environment continues to expand at a steady, if slower, pace.
Why Bessent Believes Recession Risk Is Low
Bessent outlined several reasons why the U.S. economy is not showing recession-level stress. A major factor is labor-market strength, with unemployment remaining historically low and job creation still positive. Even as hiring cools from post-pandemic highs, wage gains remain solid, supporting household incomes and spending.
Consumer spending, which makes up roughly 70% of U.S. GDP, has remained surprisingly resilient despite inflation and higher interest rates. Many households have adjusted budgets without drastically cutting essential spending an indicator, Bessent said, of economic durability.
Another point she highlighted is business investment stability. While companies are more cautious, investment in technology, infrastructure, and supply-chain modernization continues to expand. These trends indicate firms are planning for long-term growth rather than preparing for economic contraction.
Bessent also stated that financial-system stability remains strong, with banks well-capitalized and credit markets functioning normally. Although some regional banks face balance-sheet pressures from commercial real-estate exposure, systemic risk remains contained, according to Treasury assessments.
Areas of Caution Remain
Despite her optimism, Bessent acknowledged that certain parts of the economy face headwinds. Manufacturing output has cooled, housing affordability remains strained due to high mortgage rates, and small businesses continue to report tighter lending conditions.
Inflation remains a concern as well. Although it has fallen significantly from its peak, core price pressures persist across services sectors. The Treasury Secretary noted that policymakers must remain vigilant but said inflation alone does not signal recession.
She also pointed to global risks, including geopolitical instability and weaker demand from major trading partners, as factors that could influence the U.S. outlook. However, she stressed that none of these indicators currently suggest a nationwide recession is imminent.
Market Reaction to Bessent’s Remarks
Financial markets reacted cautiously to Bessent’s comments. Equity indexes rose modestly, while Treasury yields remained steady as investors weighed her optimism against mixed economic data. Analysts noted that while confidence from top policymakers is significant, markets will continue to rely heavily on upcoming inflation reports, jobs numbers, and Federal Reserve guidance.
Still, Bessent’s message appears crafted to reassure the public and emphasize that slowing growth does not automatically equate to economic contraction. The Treasury continues to project moderate growth through next year.
FAQs
Q1: Who said the U.S. economy is not at risk of recession?
Treasury Secretary Dawn Bessent stated that the U.S. economy is not facing a broad recession.
Q2: Why does Bessent believe recession risk is low?
She cited strong labor markets, stable consumer spending, solid business investment, and financial-system resilience.
Q3: Are any sectors showing signs of slowdown?
Yes. Manufacturing, housing, and small-business lending are areas experiencing pressure.
Q4: Does inflation still pose a threat?
Inflation remains elevated but is not signaling recession, according to Bessent.
Q5: How did markets respond to her comments?
Markets reacted cautiously, with modest gains and stable bond yields.
Q6: What risks could change the outlook?
Geopolitical tensions, global demand weakness, or unexpected financial-sector stress could shift conditions.