White House plays down recession talk as US stocks plunge

A key economic adviser to US President Donald Trump on Monday pushed back on talk of recession stemming from uncertainty around his administration's tariff policies, as American consumer's fears grow and US stocks plunged.

Head of the National Economic Council, Kevin Hassett, said there were many reasons to be optimistic about the US economy, despite some predictions of a contraction in gross domestic product in the first quarter and concerns about inflation.

Trump's tariffs on Canada, China and Mexico were already having the intended effect of bringing manufacturing and jobs back to the United States, he said.

"There are a lot of reasons to be extremely bullish about the economy going forward. But for sure, this quarter, there are some blips in the data," Hassett said, saying those stemmed from both timing effects of Trump's rapid-fire tariffs push and some of what he called the "Biden inheritance."

Trump and his team have repeatedly bashed the economy that they inherited from Democrat Joe Biden. But when Trump took office in January, GDP growth had largely exceeded trend for two years, consumer spending was strong and unemployment was still near historic lows.

Several recent indicators, though, have pointed to a softening trend, and the New York Fed's monthly Survey of Consumer Expectations out on Monday concluded: "Households expressed more pessimism about their year-ahead financial situations in February, while unemployment, delinquency, and credit access expectations deteriorated notably."

The percentage of households expecting the jobless rate to be higher a year from now rose to its highest since September 2023.

US stock markets, already in retreat amid concern about his erratic decision-making on tariffs that most economists see as slowing activity and stoking inflation, on Monday were suffering their largest drop since Trump took office. The S&P 500, which hit a record high in mid-February, was down 2.7 per cent and Nasdaq was off by four per cent. Both were at their lowest since September.

The S&P 1500 Supercomposite Index, one of the widest measures of the US stock market, has lost nearly $4.9 trillion (AED 18 trillion) in value since its record high in mid-February.