{"id":270025,"date":"2025-01-31T06:21:14","date_gmt":"2025-01-31T06:21:14","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2025\/01\/31\/bessents-3-3-3-plan-in-the-context-of-2024q4-advance-gdp-release\/"},"modified":"2025-06-25T17:09:32","modified_gmt":"2025-06-25T17:09:32","slug":"bessents-3-3-3-plan-in-the-context-of-2024q4-advance-gdp-release","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2025\/01\/31\/bessents-3-3-3-plan-in-the-context-of-2024q4-advance-gdp-release\/","title":{"rendered":"Bessent\u2019s 3-3-3 \u201cPlan\u201d in the Context of 2024Q4 Advance GDP Release"},"content":{"rendered":"

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Actual hit GDPNow nowcast of 2.3%, q\/q AR (see Jim\u2019s post<\/a> for a discussion) Still, achieving Treasury Secretary Bessent\u2019s 3% annual growth<\/a> (in addition to 3% deficits and additional 3 million barrels oil) is going to be tough.<\/p>\n

What does 3% look like compared to forecasts?<\/p>\n

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Figure 1:<\/strong> GDP (bold black), CBO projection (light blue), WSJ January survey (red squares), January IMF WEO (blue triangle), and 3% trend (tan line). Source: BEA, 2024Q4 advance, CBO, WSJ, IMF, and author\u2019s calculations.<\/em><\/p>\n

Given Bessent\u2019s goal, the output gap would 4.8% by end-2028, using the CBO\u2019s estimate of potential GDP. This implies that Mr. Bessent must be anticipating some sort of supply side miracle, coming from tax cuts or deregulation or divine intervention<\/p>\n

This growth goal is even more implausible given the current law deficit in FY 2025 is projected to be about 6.2% by the CBO. Reducing the deficit to 3% would require shaving the deficit by about a trillion dollars. Since Trump is expected to eschew allowing the TCJA to lapse, the necessary spending cuts will be even larger. It\u2019s hard to see how the 3% growth rate can be achieved given contractionary fiscal policy.<\/p>\n<\/p><\/div>\n

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