Treasury Secretary Scott Bessent expressed confidence Wednesday that the U.S. economy can return to a 3% growth trajectory as the Iran war nears an end.
“This year we’ll probably do something with a 3 in front of it,” Bessent said in a live interview on CNBC’s “Squawk Box.” “The underlying economy is strong.”
But growth has slowed over the past two quarters as the domestic economy grapples with a number of factors, including a resurgence in inflation, a weak labor market and the impact of President Donald Trump’s tariffs.
Gross domestic product increased at an annualized rate of 1.6% in the first quarter of 2025, after increasing by just 0.5% in the fourth quarter of 2025, ending the year with 2.1% growth.
But Bessent reiterated that his “3-3-3” plan of 3% growth, a 3% deficit-to-GDP ratio and an increase in domestic oil production by 3 million barrels per day is still achievable. He estimated that the economy was growing at about 4% in February, just before the US and Israel launched their attacks on Iran.
“I think by the end of this president’s term, we’re going to get to a point where we’re going to get a 3. The important thing is when we start paying down the overall debt as a percentage of the economy,” he said of the deficit target.
The fiscal deficit as a percentage of GDP was 5.8% by the end of 2025, after exceeding 6% in 2023 and 2024. This was an unusually high rate in normal times, as large fiscal spending during the coronavirus pandemic spilled over into subsequent years.
The budget shortfall through the first eight months of fiscal year 2026 is $1.25 trillion, down 9% from a year ago. The main factor is high funding costs, accounting for the second largest budget expenditure after Social Security.
President Trump has repeatedly called on the Federal Reserve to lower benchmark interest rates as a way to reduce the debt burden. But the Fed has resisted cutting rates further this year as inflation soars.
Bessent said President Trump has “full confidence” that new Fed Chairman Kevin Warsh will properly guide policy.
