Treasury Secretary Scott Bessent said Tuesday that Americans will feel substantial relief on affordability issues during a “bountiful” 2026, when inflation will drop and real wages will rise.
“There are going to be substantial refunds to working American households in the first quarter,” Bessent told Fox News’ “Mornings with Maria” on Tuesday.
“They will change their withholding. They will get an increase in real incomes. So I am very optimistic for working Americans, for job growth, for capital formation. But we cannot let the Democrats shut down the government.”
Bessent said President Trump’s tax, energy and immigration policies are starting to reverse the “worst inflation in 50 years,” which he blamed on the Biden administration and Federal Reserve. He added that falling rents, lower energy prices and a surge in capital investment are early signs of relief.
Last month, following a “blue wave” in local elections, voters consistently ranked affordability as a top issue in exit polls, and consumer sentiment plunged to its lowest level in more than three years – near an all-time low.
Bessent assured Americans, however, that 2026 will be a “bountiful” year, arguing that 2025 should be thought of as “setting the table” with Trump’s policies.
“Affordability has two components…there [is] constraining spending and then upping revenues, which is what we’re doing,” Bessent said.
“I suspect that we are going to see a substantial drop in inflation in the first six months of next year.”
He nodded to lower rents as evidence that the Trump administration’s policies are already bringing economic relief.
“The mass, unfettered immigration, they have pushed up rents, especially for working Americans,” Bessent said.
“So President Trump, by enforcing the border, sending home more than 2 million illegals, we’re now seeing…rents coming down substantially.”
Bessent said he expects to end 2025 with 3.5% GDP growth, a shrinking budget deficit and an uptick in capital expenditures.
This progress – along with roughly $1,000 to $2,000 tax refunds in the first quarter and higher real wages – will help boost growth in 2026.
Bessent also argued against the Fed’s view that growth spurs inflation, arguing that it is “friction” – when there is more demand than supply – that causes prices to rise.
Trump’s deregulation agenda will help create more supply “across everything” and prevent inflation, he added.
“We’re going to go back to the kind of non-inflationary growth where working Americans do better than supervised workers. Lower-income households do well,” Bessent said.
“Main Street, Wall Street can both do well. And my guess is both have a very good year next year.”
Recent economic reports have delivered a mixed bag of data, especially as the longest-ever government shutdown created a months-long data drought.
The November jobs report, which was released on Tuesday following a delay, showed hiring remained steady as US employers added 64,000 jobs.
But the unemployment rate jumped to 4.6% in the same month – its highest level since September 2021.
According to the most recently available Consumer Price Index, inflation rose 3% in September – slightly below expectations, yet the fastest rate since the start of this year.
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