The Blubber

The Trump administration is forecasting a strong rebound in U.S. economic growth over the next year, following a first-quarter contraction, as its economic policies begin to take effect.

In a broad-ranging interview with Bloomberg Television on Friday, Treasury Secretary Scott Bessent said the administration’s agenda—which includes pro-growth trade measures, tax cuts, and deregulation—will soon translate into a boost in economic activity. During the 2024 campaign, Trump pledged to lift up working- and middle-class Americans in regions hit hardest by globalization.

“I expect that by this time next year, we’ll be growing at more than 3%,” Bessent said. “And I think we’ll start to turn the corner toward the end of the year.”

The main risk to that outlook, he warned, is potential obstruction from the courts and Democratic lawmakers—particularly when it comes to fast-tracking permits for major energy projects. Those projects are seen as critical to powering the AI data center boom, which demands large-scale energy infrastructure.

The U.S. economy contracted at an annualized rate of 0.3% in the first quarter of this year, a downturn driven in part by businesses rushing to import goods ahead of new tariffs imposed by the Trump administration. Following that contraction, a joint poll by Fortune and Deloitte in April found a sharp rise in pessimism among global CEOs.

Bessent touched on several major economic initiatives the administration is promoting, including Trump’s proposed tax reform, which he refers to as the “one big, beautiful bill.”

Reducing the deficit remains a longer-term challenge

One of the bill’s most important growth drivers, Bessent explained, is a provision allowing domestic manufacturers to immediately expense equipment purchases, rather than depreciate them over time—effectively lowering their tax burden.

He added that planned savings from cutting prescription drug costs would also help reduce the federal deficit relative to GDP.

“President Trump has made a bold move on drug pricing reform, and it has the potential to save HHS a significant amount of money,” Bessent said.

Still, projections from the Congressional Budget Office suggest the legislation would add roughly $3.8 trillion to the deficit over time. Bessent conceded that even under optimistic assumptions, next year’s deficit could exceed his 3% of GDP target.