Bessent says correction "healthy" for markets that had been "euphoric"
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Scott Bessent testifying before the Senate. Photo: Chip Somodevilla/Getty Images
Treasury Secretary Scott Bessent on Sunday said the correction in the S&P 500 and Nasdaq was "healthy," and suggested that prior strong performance in stocks had been signs of a "euphoric" market.
Why it matters: Treasury secretaries don't typically welcome major stock indices falling 10% in less than a month.
- But Bessent again said the economy needed to go through a "transition" as deficits come down and government spending declines.
What they're saying: "I've been in the investment business for 35 years, and I can tell you that corrections are healthy. They're normal. What's not healthy is straight up, that you get these euphoric markets. That's how you get a financial crisis," Bessent told NBC's "Meet the Press" Sunday.
- "It would have been much healthier if someone had put the brakes on in '06, '07. We wouldn't have had the problems in '08," Bessent said, referring to the global financial crisis.
By the numbers: After hitting highs on Feb. 19, the S&P 500 fell 10% through March 13, while the Nasdaq fell more than 11%.
- Both are among the world's worst-performing major indices this year.
The intrigue: U.S. stocks rallied on President Trump's election, before starting to fall once he began implementing his tariff policies.
- Both indices rose 6% to 9% from Election Day through their Feb. 19 peak.
Between the lines: Over the last week Trump imposed steel and aluminum tariffs globally, threatened (and then withdrew) further retaliatory tariffs against Canada, and promised 200% tariffs on European wine and champagne.
- A key measure of big CEOs' confidence in the economy dipped, even as Trump brushed off C-suite concerns, saying they had "plenty of clarity."
- While stocks fell, gold surged to an all-time high above $3,000, as investors and governments sought tariff-safe assets.
Zoom out: "I'm not worried about the markets. Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great," Bessent said.
What to watch: Bessent, as he has in recent days, declined to rule out the possibility of a recession.
- He said "there are no guarantees" about what may come, and while he expects an "adjustment" in the economy, "there's no reason that it has to" lead to a full-blown recession.
- "But, you know, I can tell you that if we kept on this track ... what I could guarantee is we would have had a financial crisis," he said.
