Bessent: High US Interest Rates Trigger Housing Recession

Bassyonni

ago 7 hours

Bessent: High US Interest Rates Trigger Housing Recession

High interest rates are currently impacting the housing market in the United States, with U.S. Treasury Secretary Scott Bessent stating that certain areas are experiencing a recession. He emphasized that the Federal Reserve needs to act promptly to lower rates.

Bessent’s Analysis of the Current Housing Market

In interviews, Bessent highlighted that while the overall U.S. economy appears stable, rising mortgage rates are significantly affecting the housing sector. He pointed out that the real estate market is facing challenges, particularly for low-income consumers.

Impact on Low-Income Consumers

Many low-end consumers carry debts rather than assets.
These individuals are being hit hardest by the high mortgage rates.

Pending Home Sales and Economic Transition

The National Association of Realtors reported that pending home sales in the U.S. remained unchanged in September. Bessent described the current economic landscape as a transition period, indicating that adjustments are necessary for recovery.

Federal Reserve’s Role

Criticism of the Federal Reserve’s policies has intensified, particularly following remarks made by Fed Chair Jerome Powell. He indicated that further rate cuts might not occur during the upcoming December meeting.

Bessent is among those urging the Fed to lower interest rates more quickly.
Federal Reserve Governor Stephen Miran expressed similar concerns, advocating for a 50 basis point cut instead of 25.

The Need for Action

Bessent believes that if monetary policy remains tight for too long, it could further induce a recession. He argued that ongoing cuts to government spending have contributed to reducing the deficit-to-GDP ratio from 6.4% to 5.9%. He maintains that this should help alleviate inflation pressures.

In summary, the high interest rates are causing a significant downturn in the housing market, particularly for vulnerable populations. The consensus is clear: the Federal Reserve must take decisive action to avert further economic decline.