Treasury Secretary Bessent says U.S. GDP could take a hit from the government shutdown

Treasury Secretary Scott Bessent said Thursday that U.S. economic growth could be hurt by the government shutdown.

“This isn't the way to have a discussion, shutting down the government and lowering the GDP,” Bessent said during a CNBC “Squawk Box” interview. “We could see a hit to the GDP, a hit to growth and a hit to working America.”

The Cabinet official spoke on the second day of the government closure as the two warring sides in Washington, D.C. have yet to come to an agreement on a continuing resolution that would allow spending and operations to proceed.

Growth in the U.S. has been on upward trajectory over the past two quarters after the economy slogged through the early part of the year.

Gross domestic product rose at a 3.8% annualized pace in the second quarter, and, according to the Atlanta Federal Reserve GDPNow tracker, is on track to grow at the same rate for the recently completed third quarter.

Though previous government shutdowns have shown little impact on growth, a prolonged stoppage could inflict some damage, particularly if President Donald Trump follows through and permanently fires a significant amount of the 750,000 or so federal workers impacted by the current situation.

Asked about whether Trump is considering that move, Bessent called it a “talking point.”

“Senator [Chuck] Schumer, Representative [Hakeem] Jeffries, you know, they're weak, they're discombobulated,” Bessent said of the respective Democratic leaders in the Senate and House. “They don't represent the American people, and you know they're making up excuses.”

The labor market is one of the most sensitive parts of the economy now. Private payrolls fell by 32,000 in September, according to ADP, reflecting the slowdown in hiring.

Though weekly jobless claims have been largely in check, announced layoffs this year are at their highest level since 2020, the year of the Covid pandemic, outplacement firm Challenger, Gray & Christmas reported Thursday.

On a separate matter, Bessent said there will be news announced Tuesday on “substantial support” for farmers, particularly in the soybean industry.

Also, he said interviews are continuing to find a replacement for Fed Chair Jerome Powell, whose term expires in May 2026. Bessent has been speaking with some 11 prospective hopefuls for central bank chief. The first round of interviews has been completed, with the second to start next week, ultimately resulting in a list of three to five candidates referred to Trump for a final decision.