U.S. Treasury Secretary Scott Bessent warned Thursday that the ongoing government shutdown could pose a serious threat to the nation’s economic growth, potentially undermining the progress achieved over the past two quarters.

“This isn’t the right way to have a discussion — shutting down the government only slows the economy and reduces GDP,” Bessent said in an interview on CNBC’s Squawk Box. “We could see a hit to growth and a setback for working Americans.”

His comments came as the federal government entered its second day of closure, with lawmakers in Washington still unable to reach an agreement on a temporary spending bill that would reopen agencies and restore normal operations.

The U.S. economy had shown encouraging momentum in recent months. After a sluggish start to the year, growth rebounded sharply, with gross domestic product expanding at an annualized rate of 3.8% in the second quarter. The Atlanta Federal Reserve’s GDPNow tracker suggests that the third quarter likely saw a similar rate of expansion, indicating a period of steady economic improvement before the current shutdown.

While previous shutdowns have often had limited short-term effects, Bessent cautioned that a prolonged halt could prove far more damaging this time, especially if President Donald Trump proceeds with his threat to permanently dismiss large numbers of federal workers. Roughly 750,000 government employees are currently affected by the closure.

When asked whether Trump truly plans to carry out those dismissals, Bessent downplayed the idea, calling it “mostly a talking point.” He also criticized Democratic leaders Sen. Chuck Schumer and Rep. Hakeem Jeffries, describing them as “weak and disorganized” and accusing them of failing to represent the interests of the American people.

The labor market, Bessent noted, remains one of the economy’s most vulnerable areas. According to ADP data, private-sector employment fell by 32,000 in September, suggesting a cooling in hiring momentum. While weekly jobless claims remain relatively stable, a separate report from Challenger, Gray & Christmas found that announced layoffs so far this year are at their highest level since 2020, the year the pandemic began.

Bessent also mentioned that the Treasury Department will announce “substantial support” for farmers on Tuesday, with particular attention to those in the soybean industry. The details of that assistance are expected to provide relief to agricultural producers struggling with both economic uncertainty and global market pressures.

In addition, Bessent confirmed that the search for a successor to Federal Reserve Chair Jerome Powell is progressing. Powell’s term ends in May 2026, and Bessent said interviews with 11 potential candidates have already been completed. A second round of interviews is scheduled to begin next week, after which a shortlist of three to five finalists will be sent to President Trump for consideration.

Despite the political turmoil, Bessent emphasized that maintaining economic stability remains the administration’s top priority. “We can’t afford to let politics get in the way of growth,” he said. “The American economy is resilient, but even resilience has its limits.”