US economic officials are expressing optimism about the country’s growth outlook, forecasting stronger performance than previously anticipated amid ongoing productivity gains and technological advancements.

Kevin Hassett, a senior economic advisor, indicated in a recent closed-door discussion with Australian superannuation fund representatives and global investors that the US economy could grow at about 4% this year, exceeding earlier administration targets of around 3%. Hassett attributed the momentum to a productivity boom and a robust labor market, with limited disruption from emerging technologies like artificial intelligence (AI). He highlighted the August jobs report, which showed the US economy added 162,000 positions, as evidence that AI had not yet stressed employment levels. Hassett suggested that firms adopting AI experience significant increases in sales, employment, and wages due to improved worker productivity, whereas companies slower to integrate the technology risk falling behind.

Similarly, Robert Bessent, Chief Investment Officer at a major asset management firm, cited the Federal Reserve Bank of Atlanta’s GDPNow model, which projects an annualized growth rate of 5% for the current quarter. Speaking on Fox Business, Bessent urged Federal Reserve policymakers to maintain flexibility on interest rate decisions, suggesting the US economy is entering an “acceleration phase” following stabilization efforts.

On fiscal matters, Hassett downplayed concerns over rising national debt, which recently surpassed $40 trillion. He noted that much of this debt is held domestically, with external obligations amounting to approximately $15 trillion. Nonetheless, he acknowledged the need for tighter government spending controls and recognized the challenges posed by elevated interest rates. Following the Federal Reserve's unanimous 25 basis point rate hike earlier this month, Hassett suggested limited room for further increases, noting that historically, interest rates tend to run about two percentage points above inflation.

Trade and industrial policy also remain key factors in the economic outlook. Hassett pointed to the impact of recent tariff policies and tax incentives in encouraging companies to relocate production back to the United States, a trend known as onshoring. He explained this shift is driven partly by the elimination of tariffs on domestically produced goods, which has made US manufacturing more competitive globally.

While officials remain broadly positive about the near-term prospects, they cautioned that unforeseen external events or policy disruptions could affect growth trajectories and fiscal targets. Hassett expressed uncertainty about meeting the administration’s goal of reducing the budget deficit to 3% of GDP, stating this would depend on whether significant “force majeure” events emerge to complicate fiscal management.