Bessent: AI is about to take off, Fed should be counting its potential

What they're saying: Bessent, in a Fox Business appearance Wednesday morning, argued that the Fed was missing the potential for technological change to advance the economy, as opposed to the central bank's embrace of the internet's disruption in the 1990s.

• "There's a very good chance with this AI boom that we're seeing, we're going to see the productivity kick in as soon as the first quarter of next year, so I think everyone who's setting policy at the Fed, whether it's the board, the regional bank presidents, the staff, should have a bit of an open mind here," he said.

The big picture: The administration believes that the economy is strong and poised to grow even further and that lower interest rates would unlock that expansion.

• It is aggressively pursuing a mission to oust Fed leadership and put in place officials who will heed Trump's demands to cut rates.
• But at the same time, Bessent is trying to make the economic case for lower rates as well.

• More productivity would let the economy grow faster without inflationary pressures, all things being equal, and might allow the Fed to cut rates more than it would otherwise.

Yes, but: Recent research has called into question some of the hype around AI — particularly, just how much companies are getting out of it in their early experiments.

• By predicting AI-driven gains will show up in productivity data soon, Bessent is effectively placing a bet on the mania paying off.

What to watch: Whether the numbers pan out as expected.