Steven Mnuchin: ‘People Are Overreacting Slightly’ to Trump’s Policies

On Wednesday, former Treasury Secretary Steven Mnuchin commented that he thinks “people are slightly overreacting” to the policy shifts from the current Trump administration.

Mnuchin, who was part of President Trump’s Cabinet during his first term, shared his views on CNBC’s “Squawk Box,” expressing that he sees no immediate warning signs of a slowdown for the U.S. economy.

“I don’t foresee a recession. The outlook doesn’t indicate a recession is on the horizon. I disagree with Larry Summers’ assertion of a 50% chance of recession,” Mnuchin stated, referring to the recent remarks from another former Treasury Secretary.

The early months of Trump’s second term have seen rising trade disputes with major U.S. trading partners such as Canada, Mexico, and China. The administration has frequently introduced and then retracted tariffs, and federal job cuts have also been recorded. These elements appear to have impacted recent drops in consumer and small business confidence readings.

Currently, the Federal Reserve Bank of Atlanta’s GDPNow tracker suggests the U.S. economy may shrink in the first quarter, although this prediction stands out as a minority view compared to the more optimistic forecasts from most Wall Street economists.

Mnuchin also talked about the recent stock market pullbacks, noting that they originated from historically high levels. On Tuesday, the S&P 500 ended 9.4% lower than its peak, while the tech-dominated Nasdaq Composite closed 13.7% below its record high.

“I believe that a natural, healthy correction in these indexes should not be seen as a signal that the economy is in trouble,” he remarked.

Mnuchin, who previously held a position at Goldman Sachs, was regarded as a stabilizing force in Trump’s first administration and played a key role in developing economic relief strategies during the Covid-19 pandemic.

He mentioned on Wednesday that he didn’t concentrate on daily market fluctuations while at the Treasury but regarded them as an effective long-term “barometer.” Trump has stated in recent days that he is not focused on the stock market’s performance.

Since his departure from office, Mnuchin has been managing his investment firm, Liberty Strategic Capital.