Scott Bessent and the ‘Three Arrows’ Growth Strategy: What You Need to Know

It could be said that President-elect Donald Trump’s Treasury Secretary nominee Scott Bessent’s plan for the world’s largest economy was inspired by the late Japanese Prime Minister Shinzo Abe.

A decade ago, the Japanese prime minister sought to overhaul the economy using a strategy called the “Three Arrows.” The three-pronged approach consisted of increasing government spending, easing monetary policy, and adjusting the economic landscape to bolster growth prospects.

So, in 2025 and beyond, the new Trump administration might fire off three different types of arrows.

Last summer, Bessent, a Wall Street billionaire financier, outlined a “three arrows” approach to stimulating the U.S. economy and improving government finances.

The first step would be to aim for 3 percent real economic growth.

Related Stories

For a second arrow, the hedge fund mogul, a deficit reduction advocate, would push Trump to lower the budget deficit to 3 percent of GDP by the end of his second term.

And the final arrow, according to the founder of Key Square Group, is boosting domestic crude oil production by 3 million more barrels per day.

“So that would be my 3-3-3,” Bessent said.

While Trump has pledged to “restore America’s prosperity,” economists and market watchers have reached different conclusions about whether Bessent’s three arrows can accurately hit their targets.

The message is that if anyone can do it, it might be Bessent.

“Bessent will, in fact, be invaluable to Trump as he navigates his way through the very tricky business of global trade and its impacts on interest rates, currency strength, inflation, and ultimately, your pocketbook,” said Mark Malek, the CIO at Siebert Financial, in a note emailed to The Epoch Times.

3 Percent Growth

Real GDP increased at an average annual rate of 2.3 percent from 2018 to 2023, compared to 2.5 percent last year.

Looking ahead to next year, Goldman Sachs Research estimates the economy will grow by 2.5 percent, higher than the consensus estimate of 1.9 percent.

A chorus of economists has offered various assessments of Trump’s economic plans, stating that tariffs, for instance, could be a drag on growth.

“In net terms, we expect a second Trump administration to be a slight drag on GDP growth,” said Paul Ashworth, the chief North America economist at Capital Economics, citing trade levies.

The president-elect has proposed 10–20 percent universal tariffs on all imports and levies as high as 100 percent on Chinese goods arriving in the United States.

Oxford Economics says tariffs may have modest effects on GDP, and trade values could decline in the coming years.

“We expect Trump’s tariffs will reduce global trade values by more than 7 percent by 2030 compared to our pre-election forecasts. By contrast, we only anticipate a modest 1.8 percent hit to nominal GDP over the same period.”

According to James Pethokoukis, a senior fellow at the American Enterprise Institute, slower productivity and labor force growth are other potential roadblocks to achieving a 3 percent economy.

JPMorgan Chase’s 2025 economic outlook forecasts that labor force growth will be 0.45 percent and productivity growth will be 1.35 percent.

By comparison, labor force growth contributed nearly 3 percent to GDP growth in the 1970s, Pethokoukis notes.

This is not lost on incoming administration officials.

Bessent has stated that one of the goals for the soon-to-be 47th president is to get people back into the workforce.

A public policy analysis organization anticipates that the Trump-era tax cuts will benefit the broader economy in the long term.

“While the uncertainties are significant, we’re not inclined to appreciably modify our pre-Trump baseline. In our view, investors who stay riveted on the economy’s fundamentals will reap benefits,” they said.

If the 3-3-3 plan is accomplished, it could be a boon for the U.S. dollar and result in lower interest rates, “creating a net favorable environment” for financial markets, say Allianz economists.

While the next administration’s deregulatory strategy will be a terrific opportunity for energy companies, market experts are debating whether it will boost output for an industry dependent on supply-demand dynamics.

Prices are expected to be lower next year as global energy markets face a surplus.

“It is likely we see more permits for drilling on federal lands and less regulations by reducing permitting times for pipelines, to name a few options,“ said James Mick, a senior portfolio manager at Tortoise. ”Yet we believe that U.S.-based firms will make decisions on whether to drill on economics, not rhetoric from the president.”

Mick anticipates crude prices will trade within a $60–80 range next year.

The industry’s break-even levels are about $64 a barrel, based on surveys of productions by the Federal Reserve banks of Dallas and Kansas.

One industry executive says his firm can produce oil profitably as low as $20.

“My view is $55 is a really good number,” Adam Ferrari, the CEO of Phoenix Capital Group, recently told The Epoch Times.

Trump, with his administration picks—shale executive Chris Wright at the Department of Energy and North Dakota Gov. Doug Burgum at the Interior Department—is signaling that production is high on his to-do list, says Ed Crooks, the senior vice president at Wood Mackenzie.

“They do not deny that human-caused climate change is a real threat that needs to be addressed. But they argue that there are other priorities for a policy that are more important and more urgent and that oil and gas can continue to play the central role in the global energy system into the indefinite future.”

Bessent says restoring this figure to its level during Trump’s first term will require a combination of spending cuts and stronger economic growth.

However, with rising interest payments and a ballooning national debt—it recently topped $36 trillion for the first time—the United States “will miss the target,” says Peter Schiff, the chief economist and global strategist at Euro Pacific Asset Management.

“To achieve $1 trillion in cuts, the U.S. must also cancel automatic increases in key programs like Social Security and offset the increased spending as maturing low-yield debt rolls over at much higher interest rates.”

The Department of Government Efficiency (DOGE) aims to list $2 trillion worth of spending cuts.

In addition to spending cuts, Bessent says the United States could grow the economy to diminish the threats from its mounting debt challenges.

“I think this is the last chance for America to grow its way out of its debt problem,“ Bessent said on CNBC’s ”Squawk Box“ in September. ”If you can increase growth, you can change the trajectory.”

John Velis, a macro strategist at BNY Mellon, says it will be difficult for the federal government to return the budget deficit to 3 percent of the economy, particularly with the Tax Cut and Jobs Act likely to be extended.

Meanwhile, Trump has stated that the bulk of federal outlays and unfunded obligations—Social Security and Medicare—will not be touched. He reiterated this again during the Dec. 16 Palm Beach, Florida, press conference announcing SoftBank’s $100 billion investment.

Bessent agrees that tackling these programs will be critical to restoring America’s long-term fiscal health. However, the seasoned Wall Street investor does not think future administrations should avoid taking on this herculean task.

“These entitlements are massive. I think the next four years isn’t the time to deal with them,” Bessent said at the Manhattan Institute conference. “The next step is for a future administration to have the confidence to deal with the entitlements.”

Ultimately, according to the Tax Foundation’s analysis, Trump’s public policy proposals could reduce federal revenues by about $3 trillion over the same period.

Before the 2017 tax cuts were implemented, the Congressional Budget Office (CBO) projected revenues would tumble by about $100 billion. However, based on the government’s numbers, revenues have been $500 billion higher than the watchdog’s estimates.