Kevin Hassett, the chairman of the president’s Council of Economic Advisers, said Tuesday that risks of a recession this year are “next to zero,” but that chances of a recession next year are less certain.
“We have less clarity about next year than we do this year,” said Hassett. He said President Trump would veto anything he thought might slow economic growth.
Hassett acknowledged weaker economic growth indicators in the first quarter of 2019 but argued that was normal for this point in the year.
“The first quarter has tended to be about 1 percent lower than the growth rate for the rest of the year,” said Hassett. “Our forecast for the year will have about 3 percent growth.”
The Federal Reserve Bank of Atlanta’s running public projection of GDP growth is a 2.1% growth rate for 2019, about 1% lower than the Trump administration’s estimate, though far from a recession.
Hassett also acknowledged that a recent event, an inversion of the yield curve — meaning that interest rates for short-term Treasury securities are lower than rates on long-term ones — “can be a recession indicator.”
An inversion of the yield curve is considered a sign of impending recession. But Hassett contended that actions taken by central banks following the financial crisis to free up capital may make this time different.
“The yield curve signal is much more difficult to interpret right now,” he said.
