MNI INTERVIEW2: U.S. Recession Not Baseline View-CEA’s Miran

The U.S. economy is unlikely to slip into recession this year and trade deals should soon rekindle animal spirits, though some volatility in growth and inflation figures is to be expected given President Donald Trump’s expansive policy agenda, Stephen Miran, Chair of the White House Council of Economic Advisers, told MNI.

“A recession is really not my base case,” Miran said in an interview. “It has been an enormous policy change that the president has enacted. It shouldn't be surprising that there would be substantial volatility accompanying that.”

He pointed to a 22% surge in gross domestic investment, the highest in four years, as a sign that growth is poised to be sustained rather than peter out.

“That's not something that happens in a recession, that's not something that firms do when they're concerned about the outlook for the economy. That's something that firms do when they want to produce more and when they want to produce more in the United States,” he said. (See MNI INTERVIEW: FX Deal, Treasury Fee Not On Trump Agenda-Miran)

Miran blamed lingering inflation pressures in January for slower-than-usual consumer spending that contributed to the 0.3% decline in first quarter GDP, the first negative reading since the pandemic. 

UPWARD REVISION

He thinks the data is likely be revised higher following what he called the “statistical anomaly” of a jump in imports which produced a drag on growth of about five percentage points, which was not matched by data for inventories or consumption.

“I'm pretty confident there will be substantial revisions because of the size of that statistical discrepancy,” he said. 

Many economists predicted imports would surge ahead of Trump’s tariff proposals as firms and consumers tried to front-run them. 

As for inflation, Miran said he does not expect any sustained rise in price pressures although he concedes there could be some short-term turbulence as firms and households adjust to new ways of sourcing their goods.

TRADE DEALS 

Addressing worries about a freeze in investment as many firms wait to see where the president’s tariff schedule will land, Miran said any concerns should be temporary, particularly given that underlying consumer demand remains solid. 

“Those delays are just that. Consumer demand is pretty constant – they’re not going to stop buying things. It will continue apace,” he said. 

In addition, he said, the administration is likely to announce a string of trade deals soon that should rekindle the market’s animal spirits. 

“I do expect us to start announcing the results of trade deals soon,” Miran said. “Firms will either start taking decisions after those trade deals start to come out, or at some point they're going to say, ‘Look, I just can't wait anymore, I've got this consumer demand, and I’ve got to produce into it, so I need to hire that worker, and I need to open that office or that facility, and they don't do so with the information available.”