Economic Outlook Positive, Driven by Consumer Spending
Treasury Secretary Scott Bessent expressed optimism about the U.S. economy, stating that the holiday shopping season has been "very strong" and predicting a solid end to the year. He highlighted the economy's performance, noting that it has exceeded expectations with several quarters of 4% GDP growth. Bessent anticipates the year will conclude with 3% real GDP growth, even in the face of a government shutdown.
Economic data supports this positive outlook. While the Bureau of Economic Analysis reported a 0.6% year-over-year drop in gross domestic product between January and March 2025, the second quarter saw a significant 3.8% increase. Initial economic results for the third quarter are expected from the BEA by December 23, with the Federal Reserve Bank of Atlanta estimating third-quarter annual GDP growth at 3.5%.
Consumer spending continues to be a primary engine for the U.S. economy, contributing nearly 70% of the nation's GDP. Despite this, the University of Michigan's consumer sentiment index stood at 53.3 in December, a 4.5% rise from November but a 28% decrease compared to the previous year. Inflation remains a concern for households, with consumer prices rising 3% year-over-year in September, including a 3.1% increase in the cost of food at home, according to the latest report delayed by the government shutdown.
President Donald Trump has downplayed concerns about Americans' financial struggles, calling the focus on "affordability" a "con job" and a "Democrat scam." However, recent polls indicate that about two-thirds of registered voters feel the Trump administration has not adequately addressed economic issues and the cost of living. When asked about the President's comments, Bessent attributed current inflation issues to the previous administration and suggested that media coverage influences public perception of the economy. He stated, "The American people don’t know how good they have it," and added that while Democrats created scarcity in energy and through over-regulation, leading to affordability problems, "next year we’re going to move on to prosperity."
Trade Relations with China Remain Stable
In parallel developments, U.S. Trade Representative Jamieson Greer reported that China is adhering to its bilateral trade agreements. Washington is actively monitoring Beijing's commitments to ensure a stable trade relationship. Greer emphasized that the agreements reached with China are specific and easily monitored, and so far, compliance is being observed.
Greer noted that China has fulfilled approximately one-third of its soybean purchase obligations for the current growing season. This follows a period of slower purchases after a series of orders in late October. In late October, President Donald Trump and Chinese President Xi Jinping agreed to extend a tariff truce, roll back certain export controls, and reduce other trade barriers. Several aspects of this deal, including soybean purchases, the sale of TikTok, and expanded licenses for exporting rare earths, are still in progress.
U.S. Treasury Secretary Scott Bessent and Greer participated in a video call with Chinese Vice Premier He Lifeng on Friday. According to China's state-run news agency Xinhua, the discussion was "in-depth and constructive," with both sides vowing to maintain stable ties and address trade and economic concerns. Treasury Secretary Scott Bessent reiterated on Sunday that while China is not expected to accelerate its soybean purchases, they are still anticipated to occur within the current crop season.