Bessent pointed to a March 2024 article he wrote for Fox Digital titled “How the Three I’s Are Eviscerating Working Americans” as the framework for understanding the administration’s economic progress.
“Immigration, interest rates and inflation,” Bessent said, ticking off the three factors. On immigration: “Borders closed, promise made, promise kept.”
On interest rates, Bessent noted that the 10-year Treasury yield stood at 5.08 percent when Trump took office and now sits around 4 percent. “Mortgage rates key off of that,” he said, adding that he believes short-term interest rates could decline further.
Inflation to “Bite the Dust” in Coming Months
The Treasury Secretary expressed strong confidence about inflation trends. “I am very confident over the coming six, 12 months, we are going to see the third I bite the dust, and inflation is going to come down,” Bessent said.
He attributed falling inflation partly to lower energy prices. “Over my career, all or most big inflations start with an energy problem, and so energy goes into everything, even food prices at the grocery store,” Bessent explained. “So we’ve got that.”
Bessent previewed an upcoming study from the Council of Economic Advisers showing dramatic inflation differences between red and blue states. “The best way to get your inflation rate down 50 or 60 basis points is move from a blue state to a red state,” he said. “Red state inflation is at least half a percent lower than blue state inflation.”
Blue State Policies Driving Higher Inflation
The Treasury Secretary said some inflation factors remain outside federal control, citing state-level energy policies as a key driver of regional price differences. He pointed to New Jersey Governor-elect’s stated priority of reducing home energy prices after her predecessor Phil Murphy’s green energy policies.
“It was her predecessor, Phil Murphy, who destroyed the people in New Jersey through this crazy green scheme that he had,” Bessent said.
He said the administration repeatedly contacts New York Governor Kathy Hochul about approving pipeline projects to send energy to New England. “If the Northeast wants to de-industrialize and have higher inflation, if they want Europe vacation, which is what I think they’re doing, people are voting with their feet,” Bessent said.
Deregulation Key to Non-Inflationary Growth
Asked about the administration’s deregulation agenda, Bessent called it “massive” and credited it as central to achieving growth without inflation during Trump’s first term.
“Why was Trump 1.0 able to have great non-inflationary growth? You created a demand shock in the private sector with the tax bill, and that was met by substantial deregulation, and that’s how you get the low inflation,” Bessent said.
The comments came as the Atlanta Federal Reserve’s GDPNow model projects 4.2 percent growth for the third quarter, following strong second-quarter growth and a robust jobs report.
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