Bessent Says Economy May Be Starting To ‘Roll A Bit’ | Global News Avenue

President Donald Trump’s top economic adviser defended his controversial tariffs and acknowledged that the economy may begin to “natural adjustments” to the president’s new economic policies with “natural adjustments.”

“Can we see the economy we inherited start to roll a little bit?” Treasury Secretary Scott Bessent said on CNBC’s Squawk Box Talk Show on Friday?

Bessent said the financial market turmoil over the past few weeks was partly a hangover of President Joe Biden’s administration and partly a reaction to Trump’s efforts to cut federal spending.

“As we move from public spending to private spending, there will be a natural adjustment,” he said. “The market and the economy have just attracted. We are already addicted to government spending. It will be a detox period.”

According to a recent survey, the loss of some confidence in the future of the economy due to Trump’s unstable tariff policies has caused uncertainty and fear that tariffs will increase the cost of living once tariffs are imposed. Economists recently lowered their economic forecasts, expecting higher inflation and slower growth.

Now, with the greater possibility of pricing in financial markets, the Fed will be forced to lower borrowing costs this year to prevent the job market from collapsing. As of Friday morning, markets were betting on three cuts in Fed fund interest rates this year, last month, which predicted interest rates movement based on futures trading data based on Fed funds, according to CME Group’s FedWatch tool.

Trump’s tariffs and inflation

Bessent dismissed concerns about inflation. Inflation is By definition, continuous increase Over time, prices on various categories of prices, and tariffs only increase prices once when imposed.

“Tariffs are one-time adjustments,” he said.

But, researchers have found that in fact, tariffs can drive inflation, especially when they are imposed on “middle” products used to produce other products. In February, Fed researchers looked at the impact of Trump’s 2018 tariffs on China and found that they did cause some inflation by creating a ripple effect.

For example, American ship manufacturers who purchase electric motors from China must find new suppliers and resize their designs to alternative motors with different specifications. All of this drives the price further.

What does this mean for the market and the economy

Bessent has addressed the forecaster’s problem that financial markets or the broader economy will be damaged before Trump retreats. There are problems Usually constructed in stock market jargon “pits” (bet prices fall) and “calls” (bets rise).

For example, Nomura analysts this week wrote a commentary speculating where Trump’s “look” lies, in other words how far the stock price must drop before Trump lowers its tariff threat. When asked where this is, Best said Trump is more focused on the economy than the stock market.

“No,” he said. “Trump’s call is that if we have good policies, then the market will rise.”