Treasury Secretary Scott Bessent suggested that the economic growth of the current quarter might “be slower than it was” due to the U.S.-Iran war.
Speaking to CNBC’s Sara Eisen on Wednesday, Bessent emphasized that the economy was in “such good shape” before the conflict and added that strong economic indicators influenced President Donald Trump‘s decision to go to war.
Bessent leaned on what he called “micro data points” from companies and banks to build a broader perspective on the economy, rather than trying to forecast GDP with precision. He cited JP Morgan Chase (NYSE:JPM) CEO Jamie Dimon‘s recent comments about consumer credit and pointed to corporate earnings as signs, in his view, that consumers and businesses are still holding up.
When asked about a GDP prediction, Bessent stated that it would be path dependent and contingent on the duration of the conflict, which remains uncertain.
“I don’t know whether it’s three days or three weeks,” he said.
On Tuesday, Bessent told the BBC that a “small bit of economic pain” is worthwhile for long-term global security. He also said that he was “less concerned” about short-term forecasts.
Debate Deepens On US Economy
Tom Lee, the head of research at Fundstrat, argued that the ongoing war and increased defense spending are playing a significant role in the economy’s resilience and the continued rise of stocks. He explained that the increase in defense spending, potentially reaching $60 billion a month, is helping to offset the impact of rising oil prices, which are adding approximately $12 billion a month to household expenses.
However, earlier this month, economist Mark Zandi warned that the U.S. economy was becoming fragile due to weakening consumer spending and rising geopolitical tensions. He noted that real consumer spending growth has been running at “barely 1% annualized” in recent months, while the personal saving rate has fallen to around 4%, a historically low level.
Meanwhile, Dimon struck a more cautiously optimistic note. He said the economy remains resilient due to fiscal stimulus, deregulation, AI-driven investment, and Fed support. Still, he warned that rising geopolitical, energy, trade, fiscal, and valuation risks are making the outlook more uncertain.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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