Treasury Secretary Scott Bessent is telling businesses and investors that the U.S. economy can still reaccelerate this year, even after two soft quarters and a fresh inflation flare-up. In a CNBC interview, he said the economy could produce growth with “a three in front of it,” while first-quarter GDP rose 1.6% after 0.5% growth in the fourth quarter of 2025.
A wide expectations gap
Prediction-market traders are not pricing in Bessent’s target as the likeliest outcome. On Kalshi, traders gave only 14.2% odds that 2026 U.S. GDP growth lands between 2.6% and 3.0%, with the contract assigning a higher probability to growth between 2.1% and 2.5%. A separate Kalshi contract put the chance of the federal deficit-to-GDP rate falling below 5% for fiscal 2026 at 13%.
Bessent’s case rests partly on confidence in new Federal Reserve Chair Kevin Warsh and partly on the idea that growth can improve without a matching jump in inflation. He said after a New York speech that he was confident Warsh would manage both inflation and growth, and he predicted inflation would retreat as the Iran conflict subsides.
The Fed’s communication style is also changing. Warsh has started a review of how the central bank talks about policy, including the “dot plot,” the quarterly chart showing officials’ rate expectations. Bessent backed Warsh’s decision not to submit an interest-rate path projection and said the Fed’s rate guidance had become a crutch for market participants.
Bessent’s “3-3-3” plan calls for 3% GDP growth, a 3% deficit-to-GDP rate by 2028, and an additional 3 million barrels per day of domestic oil production, and the 2026 GDP contract will resolve only after the Bureau of Economic Analysis verifies the final growth rate.
