White House Economic Adviser Explains Gap Between Consumer Sentiment and Spending Data

White House National Economic Council Director Kevin Hassett analyzed the September consumer price index report and addressed the disconnect between voter pessimism and ongoing economic activity during an appearance on “Varney & Co.”

Americans continue to spend, yet frustration over inflation and borrowing costs is clouding their perception of the economy—a gap the White House is working to understand.

Hassett joined FOX Business’ Stuart Varney to discuss why consumers remain uneasy despite signs of sustained spending and investment.

White House National Economic Council Director Kevin Hassett weighs in on why Americans remain concerned about the economy despite signs of strong consumer spending and economic growth. (Al Drago/Bloomberg / Getty Images)

The tension comes as higher energy costs put renewed pressure on inflation. The Bureau of Labor Statistics reported Wednesday that the consumer price index—a broad measure of the cost of everyday goods such as gasoline, groceries, and rent—rose 0.6% monthly and 3.7% year-over-year.

Hassett attributed September’s disappointing inflation reading partly to attacks on energy infrastructure in the Middle East, while noting more stable prices in other categories.

“But for sure, there was a top line number that was disappointed. But inside the top line there’s a lot of good news,” Hassett said.

Mortgage rates present another challenge for households. Hassett said stronger income growth and lower inflation could eventually improve affordability, but cautioned against drawing conclusions from a single month of data.

“We really need to see the next month before we make a judgment about whether it’s right for the Fed to do something about this,” he said.

Even with those concerns, Hassett pointed to strong capital spending, factory construction, and consumer demand. He said bank executives told him customers are continuing to make purchases rather than falling behind on payments.

“It’s a puzzle that we’re noodling about every day ourselves, because if you look at the top line data, you’ve got [a] capital spending boom unlike anything we’ve ever seen,” Hassett said of the gap between economic activity and public sentiment.

He argued that worries about job security can weigh heavily on consumer confidence, even when broader spending remains resilient. Hassett also predicted a strong holiday shopping season, suggesting that Americans’ spending habits may paint a more optimistic picture than their views of the economy.

“My view is that the strength of the economy is visible,” he said.

Source link