Hassett’s ‘Golden Age’ View Clashes With Bond Market Fears

Hassett’s ‘Golden Age’ View Clashes With Bond Market Fears Former National Economic Council Director Kevin Hassett declared a 'golden age' for US growth on a Bloomberg podcast this week, a claim running counter to recent jobs data that showed payrolls expanding by a softer-than-expected 175,000. Hassett attributed the economy's strength to supply-side factors, defending the administration's fiscal posture despite rising government debt. ## Background The market has been operating on a 'soft landing' consensus, with investors positioning for the Federal Reserve to begin cutting rates later this year as inflation and growth cool. While the S&P 500 trades near all-time highs, market breadth—the number of individual stocks participating in the rally—has been narrowing, a sign of investor selectivity. Wall Street forecasts generally see US GDP growth slowing toward 2% and core inflation trending down toward the Fed's target, justifying monetary easing. Hassett’s argument revives the case for supply-side economics, a theory holding that lower taxes and deregulation can boost an economy’s productive capacity, allowing for faster growth without stoking inflation. This contrasts with the market’s focus on demand, which appears to be moderating. It also puts him at odds with a bond market that has pushed 10-year Treasury yields higher in recent months, partly on concerns that persistent US budget deficits will require a heavy slate of new debt issuance that investors will demand higher returns to absorb. ## Why it matters The core conflict is between Hassett's optimistic supply-side view and the bond market's fiscal anxiety. If the administration were to adopt this 'golden age' rhetoric, it could signal a reduced urgency to address the national debt, reinforcing bond investors' fears about a growing supply of Treasury securities. This would place upward pressure on long-term interest rates, which serve as a benchmark for borrowing costs across the economy, from mortgages to corporate credit. A stronger-for-longer economic scenario, as envisioned by Hassett, would upend positioning for a slowdown. Bond investors expecting falling yields would face losses. Equity investors in high-multiple growth stocks would also be vulnerable; these stocks' valuations are sensitive to the discount rate used to value their distant profits. A durable, non-inflationary expansion would instead favor cyclical sectors like industrials and materials, whose earnings are more closely tied to immediate economic activity. ## What to watch The market will monitor for any adoption of this 'golden age' language from current Treasury or NEC officials, as it would signal a shift in policy tone. The thesis will be directly tested by the next major economic data, specifically the Consumer Price Index (CPI), Non-Farm Payrolls, and the next quarterly GDP report. Stronger growth prints without a corresponding spike in inflation would lend credence to the supply-side argument, while a confirmed slowdown or inflation breakout would relegate it to the sidelines. A key test will be the market reaction to the Treasury's next quarterly refunding announcement.