The Bessent-Warsh Boom

The US administration is launching a coordinated effort to 'run the economy hot' through fiscal easing and bank deregulation, similar to the 1970s UK Barber Boom. While a 2026 economic reacceleration is expected, supply-side constraints and ineffective credit levers may lead to inflation risks rather than a sustainable boom.

Key Takeaways

• 1.The Trump administration is attempting to run the US economy 'hot' using fiscal stimulus, bank deregulation, and credit expansion, drawing parallels to the 1970s UK 'Barber Boom'.
• 2.Fiscal policy will be the primary driver of reacceleration, shifting from a 1% GDP tightening in 2025 to a 1.0-2.5% easing in 2026.
• 3.Treasury Secretary Bessent's plan for bank deregulation aims to free up $2.6 trillion in balance-sheet capacity to boost lending and lower long-term interest rates.

Table of Contents

• The UK's Barber Boom
• Bessentonomics 101 (or 3-3-3)
• What will these policies mean for the economy?
• Could Warsh’s QT proposal derail the ‘hot’ economy?

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