The U.S. economy is expected to recover to a growth rate of 3% to 4% by the first quarter of 2026, according to White House economic adviser Kevin Hassett. Speaking on Tuesday, Hassett said the temporary slowdown caused by the government shutdown would fade, allowing economic expansion to return to the robust pace seen over the past year.
“The question is, when does it all come back? And I think that some of the stuff is lost forever, and some of it isn’t,” Hassett told CNBC. “But I would guess that by the first quarter of next year, we’ll be back at the 3% or 4% growth pace.”
Shutdown impact and broader economic outlook
Economists estimate that the recent shutdown could trim 1 to 1.5 percentage points from growth that had hovered near 4% during the past year. However, Hassett expressed confidence that the economy would rebound quickly once federal operations normalize.
Recent surveys paint a mixed picture. A poll by the National Association for Business Economics (NABE) in mid-October found that more than 60% of economists expected President Donald Trump’s tariffs to shave up to half a percentage point off growth, while none anticipated the trade measures would provide a boost. The median forecast among respondents was for U.S. GDP to grow 1.8% in 2025, up from 1.3% in June’s survey.
Analysts continue to warn that weak consumer spending, sluggish global trade, and stubborn inflation could restrain growth. At the same time, rising business investment may help offset these headwinds, providing a foundation for recovery next year.
Inflation and purchasing power trends
Hassett said the administration remains focused on improving affordability for households and reversing declines in real income seen under previous leadership. He claimed Americans’ purchasing power fell by about $3,400 during the Biden administration but has increased by $1,200 since Trump took office in January.
“The overall trajectory for inflation is really, really good,” Hassett said, adding that recent fluctuations were mostly seasonal. He also noted that efforts to reduce the fiscal deficit this year would help ease price pressures in the broader economy.
Despite progress on inflation, Hassett acknowledged that essential goods remain costly. “The prices of milk and hamburgers are still way higher than during Trump’s first term,” he said, adding that addressing housing affordability and food prices were among the administration’s top priorities.
Policy measures to boost growth
The Trump administration is preparing a series of initiatives designed to strengthen consumer finances and encourage economic activity. Among them are proposals for a $2,000 dividend payment to lower- and middle-income Americans and a new 50-year mortgage option aimed at first-time home buyers.
Hassett said higher-than-expected tax revenues — roughly $200 billion above projections this year — have created room for the proposed dividend program. The longer mortgage term, he argued, could make home ownership more attainable by spreading payments over a greater period and lowering monthly costs.
“Both ideas are really good,” Hassett said, describing them as targeted tools to expand purchasing power, support families, and sustain economic momentum into 2026. While challenges remain — from uneven wage growth to trade uncertainty — the administration believes its combination of fiscal and monetary measures will return the economy to a strong trajectory in the coming year.
