Trump’s White House believes US will grow at 3-4% by first 2026 quarter despite shutdown shock

The US economy is expected to return to a growth rate of 3 per cent to 4 per cent by the first quarter of 2026, according to White House economic adviser Kevin Hassett. He noted that economists estimate the recent government shutdown could cut about 1 to 1.5 percentage points from growth rates, which had reached nearly 4 per cent over the past year.

“The question is, when does it all come back? And I think that some of the stuff is lost forever, and some of it isn’t. But I would guess that by the first quarter of next year, we’ll be back at the 3 per cent or 4 per cent growth pace,” Hassett said in an interview with CNBC.

Economists have cautioned that subdued consumer spending, sluggish global trade, slow job growth, higher unemployment, and persistent inflation are weighing on the US economic outlook. However, they said an increase in business investment could help offset some of these pressures.

A survey by the National Association for Business Economics in mid-October showed that more than 60 per cent of 40 economists expected President Donald Trump’s broad tariffs to reduce growth by up to half a percentage point. None anticipated the tariffs would boost growth. The median forecast projected the economy would expand by 1.8 per cent in 2025, up from 1.3 per cent in the June survey.

Inflation easing as affordability measures take focus

Hassett said the Trump administration was taking steps to tackle persistent affordability challenges and strengthen consumers’ purchasing power, which he noted had fallen by about $3,400 during the Biden administration but had risen by $1,200 since Trump took office in January.

He added that inflation’s overall direction was “really, really good”, despite some seasonal fluctuations, and that a deficit reduction this year would help ease price pressures. The administration, he said, was also focusing on housing affordability, while acknowledging that the prices of everyday goods such as milk and hamburgers remained “way higher” than during Trump’s first term.

Earlier this week, Hassett warned that US economic growth in the fourth quarter could turn negative if the federal shutdown persisted. Speaking on CBS’s Face the Nation, he pointed out that a shortage of air traffic controllers had already led to significant travel disruptions ahead of the Thanksgiving holiday.

“Thanksgiving time is one of the hottest times of the year for the economy… and if people aren’t travelling at that moment, then we really could be looking at a negative quarter for the fourth quarter,” he said.