Economic Advisor Kevin Hassett’s Forecast
Kevin Hassett, the economic advisor to the White House, announced that the United States economy is expected to grow between 3.0% and 4.0% for the first quarter of 2026. This projection comes after economists estimated that the government shutdown would reduce growth rates by 1 to 1.5 percentage points, bringing them down from near 4.0% over the past year.
Economists’ Concerns and Trade Tariffs
Despite the positive outlook, economists have expressed concerns about several factors affecting the US economy’s prospects. These include lower consumer spending and global trade, slow job creation, rising unemployment, and persistent inflation. However, increased business investment might provide a crucial counterbalance.
A survey by the National Federation of Independent Business revealed that more than 60% of 40 surveyed economists predicted that President Donald Trump’s broad tariffs would reduce economic growth by approximately half a percentage point. None of the economists believed that tariffs would boost growth.
The median projection was for a 1.8% growth rate in 2025, up from the 1.3% projected in June’s survey.
Congress Returns to Vote on Government Funding
Meanwhile, members of the House of Representatives returned to Washington after a 53-day recess, braving crowded airports to participate in a vote that could end the longest government shutdown in US history.
With nearly 1,200 flights canceled on Tuesday due to the shutdown, legislators like Republican representatives Rick Crawford from Arkansas and Trent Kelly from Mississippi said they would carpool to Capitol Hill. Representative Derrick Van Orden, from Wisconsin, planned to make the 16-hour trip by motorcycle.
“It’s going to be a bit chilly, but I will fulfill my duty,” said the Republican lawmaker in a social media video.
House Vote on Government Funding Agreement
The Republican-controlled House of Representatives will vote this afternoon on an agreement that would restore funding to government agencies and end the shutdown that began on October 1st and has lasted 42 days. The agreement would extend funding until January 30th.
In a matter of days, the US government could return to full operation, relieving federal workers who haven’t received their salaries and low-income families dependent on food assistance. However, the nation’s air transportation system may take several days to return to normal.
Key Questions and Answers
- What is the projected growth rate for Q1 2026? The US economy is expected to grow between 3.0% and 4.0% for the first quarter of 2026, according to Kevin Hassett, the White House economic advisor.
- How did the government shutdown affect growth projections? Economists estimated that the government shutdown would reduce growth rates by 1 to 1.5 percentage points, bringing them down from near 4.0% over the past year.
- What concerns do economists have about the US economy? Economists are worried about lower consumer spending and global trade, slow job creation, rising unemployment, and persistent inflation. However, increased business investment might provide a crucial counterbalance.
- What is the median growth projection for 2025? The median projection is for a 1.8% growth rate in 2025, up from the 1.3% projected in June’s survey.
- What is the purpose of the House vote? The House of Representatives will vote on an agreement that would restore funding to government agencies and end the shutdown that began on October 1st and has lasted 42 days.
- When can we expect the US government to return to full operation? In a matter of days, the US government could return to full operation, providing relief to federal workers and low-income families. However, the nation’s air transportation system may take several days to return to normal.
