The U.S. economy is sending Americans plenty of puzzling signals lately. According to NPR reporting, employers added 162,000 jobs in August, but wholesale prices jumped 5.4% from a year earlier.
That said, Treasury Secretary Scott Bessent said there’s a reason economic confidence remains tough to rebuild.
For households, the test is pretty clear: Does their paycheck stretch far enough? A robust jobs report offers reassurance but does little to erase the frustration of paying more for everyday necessities.
At the same time, investors face their own version of that question. An economy that continues to move can effectively support healthier corporate profits, yet sticky inflation complicates matters for borrowing costs and stock valuations.
That puts Bessent in a delicate spot.
He’s defending the administration’s economic agenda while acknowledging why so many Americans are unconvinced that their conditions are improving.
Speaking with Fox News anchor Bret Baier on the Economic Club of New York’s “The Forum,” hosted by CNBC’s Becky Quick, Bessent offered an optimistic take with some revealing qualifications.
His assessment is that the economy might be holding up, but many Americans are still waiting to feel better off.
Bessent says Americans need to feel the recovery
In his sit-down interview with CNBC, Bessent argued that Americans’ frustration with the economy is understandable, even as spending numbers show consumers are holding up.
He rejected the idea that households are simply failing to appreciate the positive economic numbers.
“The American people got torched,” Bessent said, underscoring the accumulated rise in prices and the pressure on inflation-adjusted wages.
“We had a price level change, which is very difficult to bring down,” he said.
For some color, annual inflation eased from 3.5% in June to 3.4% in July, but consumer prices are still rising, according to the Bureau of Labor Statistics.
Still, Bessent points to a growing gap between how people describe the economy and how they behave.
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Drawing on his investing background, he said he also looks at the investing sentiment alongside actual spending.
“Right now, we’re still seeing consumers spend,” he said, adding that credit-card delinquencies haven’t worsened, either.
For perspective, consumer spending rose 0.2% in July, while the New York Fed said credit-card delinquency transitions were mostly steady in Q2, though still elevated.
For Bessent, the next logical step is to make household incomes go further.
“We are working every day to try to bring the inflation back to target,” he said, adding that improving real wage growth is perhaps even more pivotal.
He said that the administration’s tax changes are support for working families, arguing that 44% of returns received that year claimed at least one of the multiple highlighted benefits. Additionally, Bessent also expects gasoline prices to drop as the Iran war eases out.
His economic outlook depends a lot on these improvements trickling down to household budgets. Additionally, continued spending points to resilience, but stronger purchasing power gives Americans a greater reason to feel confident.
Bessent says lower rates won’t solve housing alone
Housing is one major area where Bessent feels that relief could take a lot more than a change in interest rates.
Homeowners with cheap mortgages are reluctant to move for now, while buyers are up against borrowing costs, putting ownership further out of reach.
For context, Redfin’s Sept. 10 report underscored a housing market that’s been squeezed by elevated costs and sluggish demand.
During the four weeks ending Sept. 6, the typical monthly mortgage payment reached a 14-month high of $2,641, while median home prices increased by just 2.2% from a year earlier. Pending sales dropped 2.1% year over year, and nearly 21% of listings had price cuts.
Buyers seems to have greater negotiating power, but affordability remains a big hurdle.
Bessent argued that mortgage applications picked up when rates fell below 6% before the Iran conflict.
“It seems that there’s something magic and psychological about that number,” he said.
That said, cheaper financing only addresses part of the problem.
“We have to have a supply solution,” Bessent said.
He pointed to manufactured and prefabricated housing as ways to potentially increase supply. Greater consistency in building standards allows factories to produce homes more efficiently, he argued, while acknowledging the government’s limited control over local rules.
Bessent also defended restrictions on institutional homebuyers, saying that their influence could be significant in markets, even when their national share appears small.
“Markets are made on the margin,” he said.
Additionally, he argued that investors’ ability to depreciate buildings creates a tax advantage over people buying homes to live in.
What Bessent’s economic outlook means for your money
Bessent’s outlook leaves consumers with a major conundrum.
Consumers might continue spending without feeling financially secure. Though that might support corporate sales, it doesn’t quite guarantee stronger sales volumes of profits.
If households continue devoting more income to necessities, discretionary businesses face tougher competition for what remains. Businesses that can continue to retain customers without having to offer heavy discounts might be better positioned than those relying on price increases alone.
Perhaps the next big test is whether wages consistently outpace inflation. That could strengthen purchasing power while offering the recovery a more robust foundation than spending increases driven by higher prices.
For consumers, easing inflation offers gradual relief, but doesn’t restore yesterday’s grocery bills, insurance premiums, or home prices.
Additionally, housing makes that limitation a lot clearer.
Lower mortgage rates reduce payments, but healthier demand might support prices unless supply expands. Buyers therefore need to assess the full monthly expenses.
For investors, that involves watching real spending, wage growth, delinquency trends, and housing inventory together.
Bessent’s optimism will become much more convincing if households gain more breathing room and if businesses are able to grow without sacrificing margins.
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