*

Tariff uncertainty to be resolved in April, tax cuts to

boost

economy, Hassett says

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US stock markets plunge to 6-month lows

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US households grew more pessimistic about their prospects,

New

York Fed survey shows

(Adds chart on market value loss)

By Andrea Shalal and Timothy Aeppel

WASHINGTON/NEW YORK, March 10 (Reuters) - A key economic

adviser to President Donald 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 U.S. 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 U.S. economy, despite some predictions of a

contraction in gross domestic product in the first quarter and

concerns about inflation.

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," Hassett said, saying those stemmed from

both timing effects of Trump's rapid-fire tariffs push and some

of what he called the "Biden inheritance."

Trump and his team have repeatedly bashed the economy that

they inherited from Democrat Joe Biden. But when 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.

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.

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.

U.S. 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 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 U.S. economic prosperity."

The S&P 1500 Supercomposite Index, one of the widest

measures of the U.S. 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 U.S. tariffs that has created deep

uncertainties for businesses and decision-makers. The surveys

showed 70 of 74 economists polled across Canada, the U.S. and

Mexico judged that the risk of a recession had increased, and

upside risks to inflation in the U.S. rose in particular.

Economists at Goldman Sachs have cut their 2025 U.S. 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.

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 U.S. neighbors until April 2, when he plans to unveil a

global regime of reciprocal tariffs on all trading partners.

Hassett struck an upbeat note, arguing U.S. 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 Trump's campaign pledges to push through tax and

regulatory reforms.

Those things are good for his business, 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."