Treasury Secretary Scott Bessent says working Americans will soon see tangible tax relief through larger refunds and higher take-home pay, a shift he says will drive down inflation and restore affordability after years of Biden-era economic pressure.

Bessent said Treasury estimates show first-quarter tax refunds averaging between $1,000 and $2,000 per household, driven by updated withholding tables and Trump-backed tax relief measures.

He said those refunds alone could inject tens of billions of dollars back into the economy in early 2026, directly benefiting middle- and working-class families.

Speaking on Mornings with Maria, Bessent said the Trump administration is focused on letting Americans keep more of what they earn instead of expanding federal spending.

“We should think that 2025 was setting the table,” Bessent said. “2026 is going to be a bountiful year, if the Democrats don’t shut down the government.”

Bessent said real disposable income is already rising, with Treasury data showing wages beginning to outpace inflation after years of negative real wage growth under Biden.

From 2021 through 2024, inflation averaged roughly 5 percent annually, while real wages were flat or negative for most workers, according to federal labor data.

Bessent warned that Democrats could derail progress by forcing a government shutdown in January, pointing to past shutdowns that shaved an estimated 0.2 to 0.4 percentage points off quarterly GDP.

The longest shutdown on record slowed investment, delayed federal payments, and disrupted private-sector growth, impacts Bessent said the economy cannot afford as momentum builds.

Despite lingering headwinds, Bessent said the U.S. is still on track to finish the year with approximately 3.5 percent GDP growth, well above the long-term average of around 2 percent.

He said that growth reflects a rebound in capital formation, with private investment increasing as regulatory burdens ease.

Bessent argued that Trump’s tax, energy, and deregulation agenda is reversing what he called the worst inflation in 50 years, which peaked above 9 percent under Biden.

Treasury and housing data show rent inflation slowing sharply, with some metro areas posting flat or negative year-over-year rent growth for the first time in years.

“Rents are down,” Bessent said, calling housing one of the clearest indicators that affordability pressure is easing.

He blamed Biden-era mass immigration for intensifying housing shortages, noting that millions of new arrivals increased demand without corresponding increases in supply.

Bessent said President Trump’s enforcement actions, including the removal of more than 2 million illegal immigrants, have reduced pressure on rental markets.

He said border enforcement is now functioning as an affordability policy by easing competition for housing, especially in working-class neighborhoods.

Energy prices have also fallen, with gasoline prices down significantly from Biden-era highs, feeding into lower transportation and shipping costs.

Bessent said energy accounts for a large share of household inflation, and lowering those costs has a multiplier effect across the economy.

Treasury data show that real wages for production and nonsupervisory workers are now rising, reversing years where inflation erased pay gains.

Bessent said that matters most for lower-income households, which spend a higher share of income on essentials like housing, food and energy.

He also pointed to broader stock market participation beyond Big Tech, with industrials, financials, and domestic manufacturing showing strong gains.

Bessent said that shift reflects renewed confidence in U.S. production rather than speculation tied to federal spending.

He rejected claims that economic growth itself drives inflation, arguing instead that inflation occurs when supply is artificially constrained.

“Growth does not create inflation,” Bessent said. “Friction creates inflation when demand outpaces supply.”

He said deregulation under President Trump is expanding supply across housing, energy, credit, and manufacturing, easing those bottlenecks.

Bessent concluded that if Republicans keep the government open and allow Trump’s policies to continue, 2026 could mark a return to sustained, non-inflationary growth.

Lower-income and working-class households, he said, are positioned to benefit the most as prices stabilize, wages rise, and tax relief reaches Main Street.

“Main Street and Wall Street can both do well,” Bessent said. “My guess is both have a very good year next year.”