Scott Bessent says real affordability relief, 'substantial drop' in inflation coming soon

U.S. Treasury Secretary Scott Bessent said Americans should see meaningful affordability relief and a “substantial” drop in inflation in the first half of next year, citing falling rents, lower energy prices, a surge in capital investment and policy moves on taxes, energy, immigration and deregulation; he forecast $1,000–$2,000 first-quarter tax refunds, higher real wages and a productive, “bountiful” 2026 after what he expects to be about 3.5% GDP growth this year. Bessent attributed easing rental pressures in part to tougher border enforcement and argued that increased supply from deregulation will reduce inflationary friction and broaden growth beyond Big Tech. He warned, however, that a government shutdown in January could derail the gains and urged Senate Republicans to prevent a shutdown to preserve the positive macro trajectory.

Analysis

Scott Bessent, U.S. Treasury Secretary, stated that Americans should see ‘‘real affordability relief’’ and a ‘‘substantial drop’’ in inflation in the first six months of next year, citing falling rents, lower energy prices, a surge in capital investment and policy changes; he specifically forecast $1,000–$2,000 first-quarter tax refunds and said the U.S. will likely finish this year with about 3.5% GDP growth. Bessent credited tax, energy, immigration enforcement (he referenced sending home more than 2 million people) and deregulation for easing price pressures and argued these forces will increase supply and reduce the ‘‘friction’’ that drives inflation.

He highlighted a macro rotation away from Big Tech toward a broader set of sectors as capital formation accelerates and projected a productivity boom in 2026, conditional on political stability. Bessent warned a January government shutdown could derail this trajectory and urged Senate Republicans to prevent a funding lapse; third-party signals categorize the news as mildly positive with a modest market-impact score (0.3).

The immediate investor focus therefore is on near-term domestic risk: monitor rent and energy price trends, Q1 tax refund timing and consumer cash flows, and the federal funding calendar because these variables will determine whether the touted disinflation and broader growth materialize or are interrupted by political events.

Key Decisions for Investors

• Increase tactical exposure to cyclicals and capital-intensive sectors that would benefit from accelerating capital formation and deregulation while trimming concentrated, long-duration Big Tech positions
• Monitor Q1 2026 catalysts closely — the referenced $1,000–$2,000 tax refunds, rent and energy trends and early-2026 inflation prints — and be prepared to add pro-cyclical risk if data confirm a substantial fall in inflation
• Maintain defensive liquidity and consider short-duration or hedge positions ahead of January funding negotiations to protect portfolios from a government-shutdown shock that Bessent warns could derail the recovery