Treasury Secretary Bessent Projects 3% GDP Growth for 2025, Cites Robust Holiday Spending

Treasury Secretary Scott Bessent announced that the U.S. economy is on track to achieve 3% annualized real GDP growth by the end of 2025, reinforcing confidence in the nation’s economic resilience. The projection, based on preliminary data from late November and early December, reflects sustained consumer spending, stable employment, and continued investment activity across key sectors. Bessent cited retail sales data showing a 5.2% year-over-year increase during the November-December period as evidence of a 'very strong' holiday season. This surge in demand, particularly in electronics, apparel, and durable goods, contributed significantly to the uptick in quarterly GDP estimates. The Commerce Department’s advance report indicated that personal consumption expenditures rose by 3.4% in the third quarter, with the final quarter expected to exceed that figure. The administration noted that core inflation, measured by the Personal Consumption Expenditures (PCE) index, has moderated to 2.8% year-over-year, down from 3.5% in early 2025. This deceleration, coupled with a labor market where unemployment remains near 4.1%, suggests a balanced economy with inflation under control and growth well above trend. Financial markets responded positively, with the S&P 500 gaining 1.7% on the announcement. Treasury yields on 10-year notes dipped to 4.3%, reflecting reduced expectations for aggressive rate hikes. Investors are now factoring in a potential rate cut in mid-2026, assuming inflation continues to trend downward. The announcement marks a shift in tone from earlier in the year, when concerns over fiscal deficits and geopolitical risks clouded economic outlooks. Bessent emphasized that the president remains committed to fiscal discipline while supporting growth through targeted infrastructure and innovation incentives.