White House eyes return to growth of 3%, 4% by early 2026 after shutdown knock

[WASHINGTON] The US economy should return to growth of 3 per cent to 4 per cent by the first quarter of 2026, White House economic adviser Kevin Hassett said on Tuesday.

Hassett cited economists’ estimates that the government shutdown would knock about 1 percentage point to 1.5 percentage points off growth rates that had reached close to 4 per cent during the past year.

“The question is, when does it all come back. And I think that some of the stuff is lost forever, and some of it isn’t. But I would guess that by the first quarter of next year, we’ll be back at the 3 per cent or 4 per cent growth pace,” Hassett said in an interview with CNBC.

Economists have warned that weaker growth in consumption and global trade, along with slow job growth, higher unemployment and stickier inflation are marring the US economic outlook, although surging business investment could provide a key offset.

A survey by the National Association for Business Economics released in mid-October said more than 60 per cent of the 40 economists in its poll expected President Donald Trump’s sweeping tariffs to knock up to half a percentage point from economic growth. None saw tariffs boosting growth.

Their median projection was for the economy to grow 1.8 per cent in 2025, compared to 1.3 per cent projected in the June survey.

Hassett said the Trump administration was working to address persistent affordability issues and boost people’s purchasing power, which he said fell by about US$3,400 during the Biden administration but had increased by US$1,200 since Trump took office in January.

He said the overall trajectory for inflation was “really, really good” despite ups and downs that he said were seasonally related. A deficit reduction this year would help reduce macroeconomic pressure on prices, he said.

The Trump administration was also focusing on housing and how to make people’s lives more affordable, Hassett said, acknowledging that the prices of milk and hamburgers were still “way higher” than during Trump’s first term.

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Hassett said Trump’s plan to pay lower- and middle-income Americans a dividend of about US$2,000 and introduce a 50-year mortgage were both “really good ideas.”

Higher tax revenues of about US$200 billion this year made room for a dividend payment, he said, adding that a longer mortgage term could help first-time home buyers by reducing monthly payments. REUTERS