Despite the increasing pessimism among American households about the economic outlook and the sharp decline in the US stock market, the White House still insists that it is too early to call for an economic recession. Kevin Hassett, an important economic advisor to US President Trump and director of the National Economic Council, refuted the view that economic recession is caused by uncertainty in tariff policies on Monday (March 10), emphasizing that the fundamentals of the US economy remain strong. However, consumer surveys and stock market performance have shown vastly different signals, highlighting the huge divergence between the market and the government.

The optimistic stance of the White House

Hassett said in an interview with CNBC that although some predict that the US GDP may shrink in the first quarter and inflation concerns intensify, there are still many reasons to remain optimistic about the US economy. He pointed out that the tariffs imposed by Trump on Canada, China, and Mexico have already had the expected effect, bringing manufacturing and employment back to the United States. Hassett believes that the current fluctuations in economic data are mainly due to the time effect of Trump's rapid push for tariffs and the so-called "Biden legacy," and expects this trend to subside in the coming months.

Pessimistic sentiment towards families and markets

The monthly consumer expectations survey released by the New York Federal Reserve shows that households in February showed more pessimism about their financial situation for the next year, with significantly deteriorating unemployment rates, delinquency rates, and credit acquisition expectations. The proportion of households expecting an increase in unemployment rate in one year is expected to reach its highest level since September 2023. Meanwhile, the Atlanta Fed's GDPNow model suggests that the economy may contract in the first quarter of this year, mainly due to a significant drag from net trade. These data are in stark contrast to the optimistic stance of the White House.

Stock market crash and recession concerns

Due to concerns that Trump's unpredictable tariffs may lead to a slowdown in economic activity and an increase in inflation, the US stock market has recently experienced a significant decline. On Monday, the S&P 500 index fell 2.7% and the Nasdaq index plummeted 4%, marking the largest decline since Trump took office. AJ Bell investment analyst Dan Coatsworth pointed out that Trump was once seen as the savior of the market, but now his tariff policies are seen as a harbinger of economic recession. The market is starting to reconsider the possibility of a "recession" and questioning whether tariff policies will have the opposite effect.

summarize

Although the White House insists that the claim of economic recession is premature and emphasizes the long-term benefits of tariff policies, the pessimistic sentiment of American households and the sharp decline in the stock market reveal deep concerns in the market. Consumer surveys and economic models indicate that the economy may face the risk of contraction in the short term, and the uncertainty of tariff policies further exacerbates this pressure. In the future, the direction of White House policies and their impact on the economy will continue to be the focus of market attention. If the government fails to effectively alleviate market concerns, the risk of economic recession may further intensify.