The Trump administration is navigating a messaging dilemma as it seeks to highlight economic strength without dismissing the financial strain Americans continue to face. With midterm elections approaching, officials acknowledge that citing positive growth data alone is insufficient to persuade voters who remain burdened by recent price increases.
Kevin Hassett, the top White House economist, described the challenge on CNN's "State of the Union" on Sunday. He noted that claiming the economy is great risks appearing insensitive to those struggling, while explaining why the economy is strong carries the same risk. The administration aims to avoid what it views as a mistake made during the Biden years: touting strong data while ignoring the impact of a historic run-up in prices, a trend that officials admit has been influenced by Trump's policies.
Treasury Secretary Scott Bessent reinforced this stance in a Friday interview with Axios' Mike Allen. Bessent stated that the economy remains robust despite a recent inflation surge, attributing high headline inflation largely to energy prices driven by the Middle East conflict. He predicted this energy shock would fade. However, he acknowledged that Americans are still dealing with the cumulative effects of higher prices, comparing his role to an emergency room doctor treating patients who have been "backed over by the inflation Mack Truck." Bessent emphasized that merely keeping wages at pace with current inflation does not restore purchasing power lost during the previous administration.
Bessent distinguished between what Americans say and how they behave, referring to "stated preference and revealed preference." He argued that while sentiment is weak, spending behavior suggests confidence. This view contrasts with that of Jared Bernstein, the former White House chief economist under President Biden. In an email to Axios, Bernstein criticized the administration for talking past people by focusing on good GDP or jobs reports while ignoring affordability. Bernstein argued that the administration dismissed affordability concerns, which Trump previously called a hoax, and worsened them through tariffs, budget cuts, and military action.
Complicating the administration's affordability message is a sharp rise in long-term interest rates, with mortgage rates exceeding 7%. Bessent has positioned lower Treasury yields as a key component of his affordability strategy, even titling a section of a speech last year "Treasury Markets as a Barometer for Affordability." In response to recent yield surges, Bessent told Axios that he would be concerned only if the rise were idiosyncratic to the United States, noting instead that borrowing costs have climbed globally.
Bessent also addressed his limited influence over bond market dynamics following an intervention earlier this summer. He stated, "I can't control the bond market," but added that he can try to encourage people to slow down and think. He defended his recent declaration that "I am the house now," a reference to his informational advantage over Wall Street, by noting that while the house does not win every hand, it plays percentages.