• Treasury Secretary Scott Bessent characterizes the U.S. economy as "hot" and projects investment will accelerate throughout 2026.
  • A 12% surge in business investment through the first three quarters of 2025 marks the largest non-pandemic increase in over a decade.
  • Bessent forecasts 3.5% GDP growth for 2025 and a substantial drop in inflation during the first half of 2026, with tax refunds potentially reaching $1,000-$2,000 per household.

Treasury Secretary Scott Bessent has painted a bullish picture of the U.S. economic trajectory, describing the current environment as "hot" and predicting that investment will accelerate throughout 2026. Speaking at a recent economic forum, Bessent attributed this momentum to a trio of policy pillars: tax cuts, including the Tax Cuts and Jobs Act; rapid deregulation; and strategic trade agreements designed to return capital and expand markets for U.S. companies.

The acceleration is already materializing in hard numbers. According to Treasury data, a 12% surge in business investment occurred through the first three quarters of 2025—the largest non-pandemic increase in over a decade. This surge is being driven by full expensing provisions that lower the cost of capital for factories, equipment, and farm structures. Major companies are deploying capital aggressively; Amazon (AMZN) invested $120 billion in the last fiscal year, while Minnesota-based firms including Medtronic (MDT), 3M (MMM), and General Mills (GIS) collectively invested over $3.4 billion, according to people familiar with the matter.

Manufacturing growth is spreading across key sectors like automobiles, pharmaceuticals, semiconductor chips, and rare earth materials. A concrete example is Boeing (BA)'s 787 Dreamliner plant in Charleston, which plans a 50% expansion with approximately 1,000 new jobs offering high wages and full benefits. Recent trade deals have generated over 1,000 new aircraft orders, supporting factory growth and hiring in related industries, Bessent noted.

On the macroeconomic front, Bessent projects that 2025 will end with 3.5% GDP growth, with 2026 being "bountiful" contingent on maintaining government funding and avoiding Democratic obstruction. He forecasts a substantial drop in inflation during the first half of 2026 and predicts tax refunds of $100-150 billion in the first quarter, potentially amounting to $1,000-$2,000 per household. "The combination of capital investment, productivity gains, and price easing is positioned to support robust, non-inflationary growth in 2026," Bessent said.

Consumer demand has remained resilient across multiple verticals including ride-sharing, travel, and e-commerce, providing a stable backdrop for this investment wave. Bessent emphasized that deregulation has removed production barriers; community banks can now lend more readily to working families, small businesses, and farmers, in contrast to the restrictive regulatory environment of previous administrations. He also attributed decreased rent inflation to border security measures and stated that "China has done everything we negotiated" regarding trade agreements, though he asserted it is unsustainable for China to continue a $1 trillion trade surplus.

Behind the scenes, Bessent has expressed concerns about the Federal Reserve as "an unelected institution that lost trust" and has urged Senate Republicans to eliminate the filibuster and maintain government funding to enable the administration's economic agenda. Efforts to reach the Federal Reserve for comment on these remarks were unsuccessful. Without sustained policy support, the current investment acceleration could face headwinds, but for now, the data suggests a hot economy is just getting started.

Correction: An earlier version of this article misstated the timeline for the business investment surge; it occurred through the first three quarters of 2025, not the full year.