Bessent Expects Strong Third-Quarter Growth as Fed Holds Rates at 3.75% to 4%
Key Facts
U.S. Treasury Secretary Scott Bessent said he expects a strong reading for third-quarter gross domestic product, but clarified that he had not yet seen the data, BlockWest reported, citing an interview with CNBC. The comments came ahead of the U.S. Bureau of Economic Analysis’s advance growth estimate, due on October 29. A day earlier, the Federal Reserve kept its target interest-rate range at 3.75% to 4%. The decision passed by a 10-to-2 vote, as the central bank described economic activity as expanding at a strong pace. Bessent’s growth forecast comes amid a monetary policy debate in which the inflation reading and the rate outlook remain in focus.
Bessent did not give a figure for his forecast and said he had not yet seen the GDP data. In a Reuters poll whose results were carried by ABAB News, economists expected annualized growth of 3.2% in the third quarter, compared with 2.2% in the second quarter. These are poll estimates, not an official GDP reading: the Bureau of Economic Analysis had scheduled the advance estimate for 8:30 a.m. Eastern Time on October 29. According to the bureau, the release is part of a series of three estimates for the same quarter. The official picture will therefore emerge in stages after the first figure is released.
Stronger forecasts are based on resilient consumer spending and business investment tied to artificial intelligence, which are likely to have offset the impact of higher oil prices, according to a Reuters report published on MarketScreener. But foreign trade could weigh on growth: the Reuters poll expected the trade deficit to drag on GDP for a fourth consecutive quarter. Economists estimated that the drag would be at least 4 percentage points in the third quarter. These factors highlight the divergence between growth components, with domestic demand and investment on one side and net trade on the other. They also mean the overall growth estimate depends on the balance of opposing forces, the report said.
In its latest monetary policy statement, the Federal Reserve said domestic spending had remained resilient and capital investment was strong. It added that productivity growth was strong, but also noted that inflation remained elevated. The committee said uncertainty remained high, partly because of geopolitical developments. Lisa Cook and Beth Hammack dissented from the decision to hold the range, preferring to raise it by a quarter of a percentage point. The vote shows that committee members did not fully agree on the appropriate move, although the majority chose to keep rates at their current level.
Bessent expressed confidence in Federal Reserve Chairman Kevin Warsh and said that raising rates again would not necessarily be a policy mistake. BlockWest quoted him as saying: "Not necessarily." In an earlier statement on September 27, Bessent urged central bank officials to keep rate options open, arguing that productivity gains from artificial intelligence and deregulation could help contain inflation. This aligns with the Fed’s current assessment, which pointed to strong productivity and investment alongside persistently elevated inflation. These remain Bessent’s stated views, while the rate decision sets the committee’s course for now.
U.S. GDP grew at an annualized rate of 2.2% in the second quarter of 2026, following growth of 2.5% in the first quarter, according to the Bureau of Economic Analysis. The second-quarter reading recorded in EL7 data matches the figure against which the Reuters poll compares its third-quarter forecast. The second estimate of GDP is scheduled for November 25, followed by the third estimate on December 23, both at 8:30 a.m. Eastern Time. These releases will allow the third-quarter estimate to be revised after the advance reading. The Fed’s October 28 decision kept the target range at 3.75% to 4%, despite two members’ preference for a quarter-point increase.