Treasury Secretary Scott Bessent says the U.S. economy is finishing the year with unexpected strength, a narrative that has grown louder as fresh data shows American growth holding firm even after months of gloomy forecasts from economists.

His comments on Sunday came as part of a broader attempt by the administration to push back against frustration over the cost of living and to assert that the worst of the inflation wave may be easing.

Speaking on CBS News’ Face the Nation, Bessent said holiday shopping so far has been “very strong” and argued that momentum has been building for months.

“The economy has been better than we thought. We’ve had 4% GDP growth in a couple of quarters,” he said.

He projected that the year would close with “3% real GDP growth,” noting that the pace remained intact even with the “Schumer shutdown” disrupting federal operations and delaying key reports.

His confidence rests partly on the contrast between real-world data and the predictions many analysts made earlier this year. For much of 2025, economists warned that inflation would flare again toward the end of the year, driven by a mix of global supply tensions, higher energy prices, and Trump’s escalating tariff battles with China and several other trading partners. Many predicted a visible surge in prices by November and December.

So far, the feared year-end spike has not materialized. The latest inflation report — postponed during the shutdown — still showed prices rising at 3% year-over-year in September, with food-at-home costs up 3.1%. Those increases remain stubborn but have not accelerated in the way analysts once believed they would.

But economists warn that the threat is not gone. The tariff confrontations themselves are unresolved, and trade experts say that further escalation between Washington and Beijing could reignite cost pressures across major consumer categories. This is part of why many analysts remain cautious: inflation has cooled, but the underlying risks have not. Bessent did not address those concerns directly in the interview, but his upbeat tone suggests he sees the numbers as evidence that the economy is weathering tariff-related turbulence better than earlier forecasts suggested.

The broader growth picture has also been more resilient than expected. The year opened on shaky ground, with GDP contracting 0.6% year-over-year in the first quarter. But the second quarter delivered a sharp rebound at 3.8%. Now, the Federal Reserve Bank of Atlanta’s early estimate pegs third-quarter growth at about 3.5%, with the official Bureau of Economic Analysis numbers coming on December 23. If that estimate holds, the U.S. will have logged a solid three-quarter recovery arc that few predicted during the harsher months of inflation.

Still, American households have not felt much relief. Consumer sentiment remains severely depressed. The University of Michigan’s December reading came in at 53.3 — an improvement from November but far below last year, underscoring how disconnected consumers feel from the headline numbers. Food, rent, insurance, and basic goods continue to absorb a larger share of monthly budgets. With households responsible for nearly 70% of U.S. GDP, the mood on Main Street has become a central pillar of the political debate.

President Donald Trump has rejected the idea that affordability has become a source of hardship. During a cabinet meeting on Tuesday, he dismissed the topic outright.

“The word ‘affordability’ is a con job by the Democrats,” he said. “The word ‘affordability’ is a Democrat scam.”

But recent polling tells a different story. NBC News found that about two-thirds of registered voters believe the administration has fallen short on the cost of living and the broader economy.

When asked about the public’s dissatisfaction, Bessent attributed the price pressures to problems carried over from the Biden era. He argued that earlier Democratic policies created the supply constraints and regulatory friction that are still haunting households.

“The American people don’t know how good they have it,” he said. “Now, Democrats created scarcity, whether it was in energy or over-regulation, that we are now seeing this affordability problem, and I think next year we’re going to move on to prosperity.”

The administration is currently using the current run of GDP numbers to reinforce its case that the economy is stronger than its critics claim. But analysts counter that everything depends on what happens next: whether inflation continues to ease or whether the unresolved tariff confrontations push prices back up. The coming BEA report on December 23 is expected to offer the clearest picture yet, revealing whether the year truly ended on solid ground — and whether Bessent’s optimism is built on an enduring turn in the economic tide or a temporary burst of good numbers.

U.S. Treasury yields opened the new week in a steady posture as investors leaned further into expectations that the Federal Reserve will deliver a year-ending rate cut on Wednesday.

The bond market’s calm tone showed just how firmly traders believe the central bank is preparing to change direction after nearly two years of aggressive tightening.

By 2:39 a.m. in New York, the 10-year Treasury yield stayed anchored at 4.141% and the 30-year held near 4.794%. The 2-year, which usually mirrors expectations around Fed actions, hovered at 3.561% with barely a twitch. The stability across maturities suggested markets were no longer in a guessing game. Yields move opposite prices, and both sides sat locked in place as traders waited for the Fed’s announcement.

Odds of a quarter-point cut have surged to roughly 87%, according to the CME FedWatch tool. A month ago, the probability sat close to 67% as markets remained unsure about the Fed’s tolerance for softer data. That uncertainty faded quickly after last week’s reports: ADP posted a surprise drop in private payrolls, and the Labor Department recorded jobless claims falling to their lowest point since September 2022. Both signals pointed to an economy losing a bit of steam, though in a way that gives the Fed comfortable room to ease policy without appearing reckless.

Some Wall Street players have been recalibrating their own expectations. Morgan Stanley reversed its original prediction for a December cut, admitting that “it seems we jumped the gun,” though the bank still sees room for a move lower based on increasingly soft language from Fed officials. JPMorgan and Bank of America remain in the camp that expects a cut, grounding their forecasts in recent policymaker remarks that leaned away from aggressive tightening.

The larger economic backdrop in the U.S. has remained more robust than many anticipated. Treasury Secretary Scott Bessent said the holiday season has been “very strong,” offering reassurance that consumer spending is still carrying significant weight.

In an appearance on CBS News’ Face the Nation, he said, “The economy has been better than we thought. We’ve had 4% GDP growth in a couple of quarters. We’re going to finish the year, with 3% real GDP growth.”

His comments set the stage for an unusual situation in which the Fed may cut rates even as growth remains firm.

A rate cut at this moment would send a strong signal. Borrowing costs across mortgages, auto loans, credit cards, corporate debt, and municipal financing tend to cool when Treasury yields fall and central bank policy shifts lower. Households and businesses would likely feel some relief after more than a year of elevated financing expenses. A softer policy stance could also help stabilize sectors that have been weighed down by high rates, including housing, commercial real estate, and small-business lending.

For financial markets, a cut would likely lift equities further into year-end as investors price in a friendlier 2026. The bond market, which has taken the brunt of the Fed’s tightening cycle, may finally get breathing space if yields drift lower on expectations of a gentler policy path.

The ripple effects won’t stop at U.S. borders. Central banks across Europe and Asia are watching the Fed’s decision closely as they prepare their final policy meetings of the year. The Swiss National Bank is up on Thursday, followed by the Bank of England and European Central Bank on December 18. Each institution is balancing easing inflation with uneven growth, and the Fed’s tone could shape how far they feel able to loosen their own stance.

In Asia, the Bank of Japan meets on December 19 for its last policy gathering of 2025. Officials have hinted at the early stages of policy normalization, but the bank remains cautious, preferring to see durable wage growth before committing to any major shift.

Global markets are currently sitting in a holding pattern. The Fed’s announcement is shaping up to be the final decisive moment of the year, one that will influence everything from borrowing costs to currency flows. Some analysts believe that if the central bank delivers the expected cut, it could mark the official start of a new phase—one where the fight against inflation gives way to managing a gradual cooldown without tipping the economy into unnecessary strain.

Nvidia CEO Jensen Huang says China holds a structural infrastructure advantage that the U.S. can no longer ignore, warning that the next phase of the AI race will hinge not only on chips but also on construction speed and energy supply.

His comments add a sharper edge to a debate already intensifying inside Washington and across the global tech sector: as demand for AI supercomputing explodes, the world’s biggest economies are now racing to see who can build fast enough — and power those systems at scale.

In a late November conversation with Center for Strategic and International Studies President John Hamre, Huang laid out a blunt comparison.

“If you want to build a data center here in the United States from breaking ground to standing up a AI supercomputer is probably about three years,” he said. China, he added, can erect major infrastructure at a stunning pace. “They can build a hospital in a weekend.”

Those remarks tap into a long-running story about China’s industrial model. For two decades, the country has run what is arguably the world’s fastest large-scale building system: highways constructed at double-digit mileage per day, megacities carved out of farmland in under five years, and full manufacturing zones built in the time it takes U.S. developers to secure local permits. Much of this comes from China’s highly centralized planning structure, its tolerance for round-the-clock construction, and a regulatory environment that moves state-approved projects forward with few of the environmental-review delays common in the U.S.

That speed, Huang warned, is about to matter more than ever. The AI boom has forced companies and governments to think in gigawatts rather than gigabits. Massive clusters of GPUs require vast campuses, power lines, cooling systems, transformers, and highly specialized electrical infrastructure. If the U.S. wants to compete in the next generation of supercomputing, it must build all of that much faster than it currently can.

Energy Capacity: Huang Says China Holds Another Advantage

Huang pointed to another imbalance: national energy supply. China, he said, has “twice as much energy as we have as a nation, and our economy is larger than theirs. Makes no sense to me.” According to him, while U.S. energy capacity has stayed “relatively flat,” China’s continues to grow “straight up,” reinforcing its lead in the long-term ability to power AI supercomputers.

Energy is emerging as the new bottleneck in the AI race. U.S. utility companies have begun warning that they cannot keep up with the skyrocketing electricity demand from data centers. Some regions are already issuing moratoriums on new power-hungry facilities. Some analysts say permitting delays, aging transmission lines, and the slow pace of new power-plant construction all threaten to derail ambitious AI expansion plans in the U.S.

China, meanwhile, has poured trillions of yuan into grid expansion projects over the years, from sprawling ultra-high-voltage transmission lines to rapid power-generation buildouts led by state-owned giants. That includes coal, natural gas, nuclear, hydro, and solar deployments — all growing simultaneously, often at speeds not seen elsewhere.

Nvidia Still “Generations Ahead,” but Huang Warns Against U.S. Complacency

Despite the infrastructure gap, Huang stressed that Nvidia remains “generations ahead” of China in AI chips — the essential engines for training and operating large AI models. He said Nvidia’s semiconductor lead remains intact, particularly in the advanced manufacturing techniques required for high-performance GPUs.

Still, he delivered another caution: the U.S. should not underestimate China’s ability to catch up. “Anybody who thinks China can’t manufacture is missing a big idea,” he said, a reference to China’s rapid capacity to scale hardware production once political and economic priorities align.

Huang’s remarks also came after he briefly stirred controversy in early November when he predicted China would win the AI race. He later softened that framing on his company’s X account, saying China was “nanoseconds behind America,” signaling a race too close — and too fast-moving — for any clear long-term winner.

He remains optimistic about Nvidia’s direction, citing President Donald Trump’s push to reshore manufacturing and accelerate AI investments. Those policies, he suggested, could give the U.S. a counterweight to China’s speed and energy advantages.

A High-Stakes Building Boom

Nvidia is one of the most aggressive players in a U.S. data-center buildout that industry executives say will surpass anything seen before. Experts tell Fortune the country could see over $100 billion in new construction in the next year alone.

Raul Martynek, CEO of DataBank, which builds data centers for major tech firms, said one facility costs roughly $10 million to $15 million per megawatt (MW). A smaller-sized center typically requires 40 MW. Scaling those numbers up, he said, the U.S. is preparing to bring 5 to 7 gigawatts of new capacity online next year — a staggering expansion.

At those prices, the U.S. is preparing for a spending wave between $50 billion and $105 billion. The growth is fueled by cloud giants, model labs, and AI startups racing to secure capacity as training cycles grow more computationally intensive.

The scale of the boom also shows why Huang keeps drawing attention to China’s structural advantages. If Beijing can deliver the same scale of capacity in half or a third of the time — and with significantly more energy available to power it — the geopolitical balance in AI infrastructure could tilt quickly.