WASHINGTON/NEW YORK — A key economic adviser to President Donald J. Trump on Monday pushed back on talk of recession stemming from uncertainty around his administration’s tariff policies, even as a survey of American households showed consumers growing more pessimistic about their prospects, and US stocks plunged.

In an interview with CNBC, Kevin Hassett, who heads the National Economic Council, said there were many reasons to be optimistic about the US economy, despite some predictions of a contraction in gross domestic product in the first quarter and concerns about inflation.

Mr. Trump’s tariffs on Canada, China, and Mexico were already having the intended effect of bringing manufacturing and jobs back to the United States, he said.

“There are a lot of reasons to be extremely bullish about the economy going forward. But for sure, this quarter, there are some blips in the data,” Mr. Hassett said, saying those stemmed from both timing effects of Mr. Trump’s rapid-fire tariffs push and some of what he called the “Biden inheritance.”

Mr. Trump and his team have repeatedly bashed the economy that they inherited from Democrat Joseph R. Biden. But when Mr. Trump took office in January, GDP growth had largely exceeded trend for two years, consumer spending was strong and unemployment was still near historic lows.

Several recent indicators, though, have pointed to a softening trend, and the New York Fed’s monthly Survey of Consumer Expectations out on Monday concluded: “Households expressed more pessimism about their year-ahead financial situations in February, while unemployment, delinquency, and credit access expectations deteriorated notably.”

The percentage of households expecting the jobless rate to be higher a year from now rose to its highest since September 2023.

Meanwhile, the Atlanta Federal Reserve’s closely followed GDPNow tracker suggests the economy could contract in the first three months of the year, largely due to an outsized drag from net trade.

Mr. Hassett said that would be a “very temporary phenomenon,” driven largely by a historical tendency to hold off on investment after a big election. This tendency should be resolved this month, and tariff uncertainty should be resolved in April, he said.

Mr. Trump himself in a Fox News interview aired over the weekend declined to predict whether his economic policies — centered so far on a blitz of tariff announcements, some of which have taken effect and others delayed or set to kick in later — would cause a recession.

US stock markets, already in retreat amid concern about his erratic decision-making on tariffs that most economists see as slowing activity and stoking inflation, on Monday were suffering their largest drop since Mr. Trump took office. The S&P 500, which hit a record high in mid-February, was down 2.7% and Nasdaq was off by 4%. Both were at their lowest since September.

“Trump was seen as the market’s savior, promising lower taxes and less stringent regulation. Now, his actions represent the harbinger of doom,” said Dan Coatsworth, investment analyst at AJ Bell in London. “The ‘R’ word is back on everyone’s lips as people ponder if trade tariffs will backfire and lead to recession rather than US economic prosperity.”

The S&P 1500 Supercomposite Index, one of the widest measures of the US stock market, has lost nearly $4.9 trillion in value since its record high in mid-February.

‘ADVERSE TARIFF ASSUMPTIONS’
Reuters polls of economists last week showed risks to the Mexican, Canadian and American economies are piling up amid a chaotic implementation of US tariffs that has created deep uncertainties for businesses and decision makers. The surveys showed 70 of 74 economists polled across Canada, the US and Mexico judged that the risk of a recession had increased, and upside risks to inflation in the US rose in particular.

Economists at Goldman Sachs have cut their 2025 US growth forecast and raised their inflation forecast, “both on the back of more adverse tariff assumptions.” They said their growth estimate was now below the consensus figure for the first time in two-and-a-half years.

Mr. Trump has imposed an additional 20% tariff on Chinese goods entering the United States, as well as 25% tariffs on imports from Canada and Mexico, although he suspended most of the duties on US neighbors until April 2, when he plans to unveil a global regime of reciprocal tariffs on all trading partners.

Mr. Hassett struck an upbeat note, arguing US tax cuts would boost the economy, increase investment and boost real wages by the second quarter, offsetting any negative fallout from the tariffs.

“Just be very wary… of conversations about recession,” he said. “What I think that what’s going to happen is the first quarter is going to squeak into the positive category, and then the second quarter is going to take off as everybody sees the reality of the tax cuts,” he said.

Austin Ramirez, president and CEO of hydraulic equipment maker Husco, based in Waukesha, Wisconsin, was among those who welcomed Mr. Trump’s campaign pledges to push through tax and regulatory reforms.

Those things are good for his business, Mr. Ramirez said, while tariffs and the threat of tariffs are negative for his business.

“Now,” he said, “the worry is that it’s all the bad stuff happening, and none of the good stuff.” — Reuters

SINGAPORE — Only seven countries met World Health Organization (WHO) air quality standards last year, data showed on Tuesday, as researchers warned that the war on smog would only get harder after the United States shut down its global monitoring efforts.

Chad and Bangladesh were the world’s most polluted countries in 2024, with average smog levels more than 15 times higher than WHO guidelines, according to figures compiled by Swiss air quality monitoring firm IQAir.

Only Australia, New Zealand, the Bahamas, Barbados, Grenada, Estonia and Iceland made the grade, IQAir said.

Significant data gaps, especially in Asia and Africa, cloud the worldwide picture, and many developing countries have relied on air quality sensors mounted on US embassy and consulate buildings to track their smog levels.

However, the State Department has recently ended the scheme, citing budget constraints, with more than 17 years of data removed last week from the US government’s official air quality monitoring site, airnow.gov, including readings collected in Chad.

“Most countries have a few other data sources, but it’s going to impact Africa significantly, because oftentimes these are the only sources of publicly available real-time air quality monitoring data,” said Christi Chester-Schroeder, IQAir’s air quality science manager.

Data concerns meant Chad was excluded from IQAir’s 2023 list, but it was also ranked the most polluted country in 2022, plagued by Sahara dust as well as uncontrolled crop burning.

Average concentrations of small, hazardous airborne particles known as PM2.5 hit 91.8 micrograms per cubic meter (mg/cu m) last year in the country, slightly higher than 2022.

The WHO recommends levels of no more than 5 mg/cu m, a standard met by only 17% of cities last year.

India, fifth in the smog rankings behind Chad, Bangladesh, Pakistan and the Democratic Republic of Congo, saw average PM2.5 fall 7% on the year to 50.6 mg/cu m.

But it accounted for 12 of the top 20 most polluted cities, with Byrnihat, in a heavily industrialized part of the country’s northeast, in first place, registering an average PM2.5 level of 128 mg/cu m.

Climate change is playing an increasing role in driving up pollution, Ms. Chester-Schroeder warned, with higher temperatures causing fiercer and lengthier forest fires that swept through parts of Southeast Asia and South America.

Christa Hasenkopf, director of the Clean Air Program at the University of Chicago’s Energy Policy Institute (EPIC), said at least 34 countries will lose access to reliable pollution data after the US program was closed.

The State Department scheme improved air quality in the cities where the monitors were placed, boosting life expectancy and even reducing hazard allowances for US diplomats, meaning that it paid for itself, Ms. Hasenkopf said.

“(It) is a giant blow to air quality efforts worldwide,” she said. — Reuters

TOKYO — Japan’s economy expanded in the October-December quarter at a slower pace than initially reported, weighed by weaker consumption but still likely supporting the case for further interest rate hikes.

At the same time, government officials and analysts expressed concern about risks from US President Donald J. Trump’s tariff policies and soft consumption affected by higher prices.

Gross domestic product (GDP) expanded an annualized 2.2% in the three months to December, the Cabinet Office’s revised data showed on Tuesday, slower than the 2.8% growth in the initial estimate and economists’ median forecast.

The revised GDP numbers translate into a quarter-on-quarter expansion of 0.6% in price-adjusted terms, compared with 0.7% growth issued in February. The softness in consumption was also seen in much weaker-than-expected household spending data released on Tuesday.

“There wasn’t any significant change, so I don’t think it will have any impact on changing people’s perceptions of the economy,” said Kazutaka Maeda, an economist at Meiji Yasuda Research Institute.

“If you look at GDP on its own, I don’t think it will prevent the Bank of Japan (BoJ) from raising interest rates.”

The BoJ raised short-term interest rates in January to their highest in 17 years and growth momentum in the world’s fourth-largest economy will be among key factors determining how fast it continues to tighten policy.

The capital expenditure component of GDP, a barometer of private demand-led strength, rose 0.6% in the fourth quarter, revised up from a 0.5% expansion in the initial estimate. Economists had estimated a 0.3% rise.

Private consumption, which accounts for more than half of economic activity, was unchanged versus the preliminary reading of 0.1% uptick.

External demand, or exports minus imports, contributed 0.7 of a percentage point to growth, unchanged from the preliminary reading. Domestic demand shaved 0.2 of a percentage point off.

Japan’s economy minister Ryosei Akazawa warned of a hit to consumption from sustained food cost increases and downside risks from overseas, including US trade policy.

“The uncertainties (from Trump’s policies) have heightened from December or January,” said Uichiro Nozaki, an economist at Nomura Securities.

A barrage of new Trump policies has increased uncertainty for businesses, consumers and investors, notably back-and-forth tariff moves against major trading partners like Canada, Mexico, and China.

If tariffs are deployed, that would have an impact on the economy, which would have repercussions on financial markets and monetary policy, Uichiro Nozaki said, adding “we need to wait and see” how the BoJ views those factors.

Separate data from the Internal Affairs ministry showed household spending rose 0.8% in January year on year, well below the market estimate for a 3.6% jump in a Reuters poll.

On a seasonally adjusted, month-on-month basis, spending dropped 4.5%, bigger than an estimated 1.9% decline. — Reuters