Bessent: $11B Shutdown Hit Won’t Trigger Recession

Economic Overview

The U.S. economy experienced a significant loss of $11 billion due to the recent government shutdown. Despite this financial impact, macro hedge fund manager Scott Bessent has indicated that there are no immediate signs of a recession on the horizon.

Bessent’s assessment suggests that the fundamental strength of the American economy remains robust. While $11 billion represents a considerable sum, it is a relatively small percentage when compared to the overall size of the U.S. economy, which is valued at approximately $27 trillion. Historically, the U.S. economy has demonstrated its capacity to withstand more severe economic shocks without entering into a recessionary period. His comments aim to alleviate concerns that government shutdowns invariably lead to widespread economic decline.

Strong Fundamentals Keep Recession Fears Low

Key sectors of the U.S. economy continue to exhibit strong performance, including employment, consumer spending, and industrial output. The job market remains particularly healthy, with unemployment rates hovering near historic lows. Consumer spending is showing consistent growth, and businesses are maintaining a cautious but steady pace of investment.

These positive economic indicators collectively point to a stable trajectory for the economy, even in the face of political disruptions. Bessent highlighted that the effects of a temporary shutdown are unlikely to undermine long-term economic fundamentals. He further explained that the ongoing momentum driven by consumer demand and corporate performance is expected to help mitigate short-term losses.

Shutdown Impacts Are Real — But Contained

While a recession is not anticipated, the $11 billion economic loss from the shutdown did have tangible consequences. Federal employees experienced missed paychecks, various government services were temporarily halted, and businesses with ties to federal operations encountered delays. These disruptions particularly affected small contractors and individuals in lower-income brackets.

However, many of these impacts are considered temporary and reversible. Following the end of the shutdown, normal operations resumed, and a significant portion of the lost economic activity was recovered. This characteristic makes the shutdown’s effect more akin to a delay rather than a permanent economic setback, which is a key factor contributing to the subdued recession fears.

• •
  The U.S. economy lost $11 billion due to the shutdown
• •
  No signs of a near-term recession despite the hit
• •
  Consumer spending and job growth remain strong