U.S. Treasury Secretary Scott Bessent offered some optimism for consumers, saying he expects price relief to arrive sooner rather than later.
“Things look great, and they’re good now. I think 2026 and 2027 are gonna be great years,” Bessent told FOX Business’ Larry Kudlow on Wednesday.
“This affordability crisis, we’ve gotten it under control. The first thing to getting it under control was stopping the Biden inflation,” he continued. “Now that we’ve done that… energy prices are down. I think that housing prices are a lagging indicator, especially in rates. So I think we could see that the CPI numbers start coming down next month, the month after.”
No economic data has been published during the federal government shutdown, but on Friday, the Bureau of Labor Statistics will release its September consumer price index report. Surveyed economists from Dow Jones and The Wall Street Journal are expecting a 3.1% increase year-over-year.
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However, a recent University of Michigan survey held consumer sentiment steady for October, showing little change from last month at 55, while economists polled by LSEG estimated a slight decline to 54.2. September’s index read 55.1.
The survey’s measure of consumer expectations for inflation over the next year fell to a still-high 4.6% from 4.7% in September. Five-year inflation expectations were unchanged at 3.7%.
When it comes to economic growth, data from the Commerce Department showed second-quarter gross domestic product (GDP) grew at an annualized rate of 3.8%.
Bessent said several tax policy changes have yet to be fully felt in the economy.
“Part of what’s happening with the tax bill is the president’s campaign promises, which he kept on: no tax on tips, no tax on overtime, no tax on Social Security and deductibility of auto loans for American cars. On the first three, working Americans have kept their withholding the same,” Bessent explained.
“I can tell you that in the first quarter of the year, we are going to see substantial tax refunds for working Americans. On Jan. 1, working Americans will reset their withholding levels and they will have substantial real income increases,” he added.
“It’s as Warren Buffett says, ‘When people ask you how to lose weight: eat less, exercise more. How do you control the budget deficit? You spend less or control spending, and grow more,’” Bessent said. “If we can keep spending flat to down and grow at least 5% nominally, maybe higher, then our deficit-to-GDP ratio – which ended the fiscal year with a 5 in front of it, the worst outside of war or recession – could make substantial progress again.”
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FOX Business’ Eric Revell contributed to this report.
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