NEC Director Kevin Hassett Talks US Jobs Market, Fed

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**Dani Berger** (0:07)
I also want to welcome to our global TV and radio audiences. I'm Dani Berger, and the US economy added 57,000 jobs in June. That missed expectations, even though the unemployment rate, it did come in to 4.2 percent. The expectation was 4.3 percent. Let's bring in White House National Economic Council Director, Kevin Hassett. Director Hassett, thank you so much for joining us. I was just speaking with Rick Reader of BlackRock, who you knew well, who at one point was interviewing. Yes, at one point was interviewing for the same job you were over at the Fed. He basically described the jobs picture as thus, stable, but I would say broadly unimpressive. Would you agree unimpressive but stable?

**Kevin Hassett** (0:48)
No, I would say that it's on an upward trajectory, that three of the last four months, surprised on the upside as you know, there were a little bit of downward divisions. This one came in a little bit below expectations, but if you lift up the hood, then the basic story that we think is animating the economy right now, is that there's a construction boom.
It's the biggest construction boom we've ever had, in part because in the big, beautiful bill, we allowed people to expense factory construction. The president talks about all the time, about all the commitments to onshore US activity, and that's showing up in construction employment which was up a lot this month. But the factories have to be turned on before the jobs go back up into the 1,200,000 range. So I actually have been a little surprised on the upside by the job market because it's been north of 100 quite a bit, and because we don't have a massive inflow of illegal immigration, then that makes the break-even job number a little bit lower. So I think this is a really strong, healthy job market, and this was a little bit on the other side of expectation, but the trend over three or four months is consistent with our view that, again, that we were growing about 3% and that we're going to have a better second half of the year as those factories turn on the lights.

**Dani Berger** (2:02)
You've been consistent on that, but you've also been consistent on this. You were saying this just a month ago. The Fed is behind the curve. Plenty of room to cut. What you're describing does not sound like an economy that needs a cut.

**Kevin Hassett** (2:15)
Well, I think that, again, what one has to do, and right now, you know, we've got Kevin Warsh there. It's different leadership, and we very much respect the independence of the Fed. I think that Kevin will watch the data and do what he thinks is right, and we'll support him in that.
I think that as an abstract principle, you know, going back a month ago on the show or anywhere else I've been speaking, I've been highlighting the fact that the old-fashioned Phillips curve that says if you have growth, you have to raise rates doesn't apply in situations where there are big positive supply shocks. And so if there's a big positive supply shock, like you have an economy with an apple tree, you plant another apple tree, now you got a lot more apples, the price of apples goes down. And with AI basically increasing productivity of firms all across the country, then that's increasing their output. We're seeing it in real GDP numbers, but not putting upward pressure on prices. Now, on the other hand, if you mailed checks to people as Joe Biden did, then they all of a sudden open up their mailbox, so they got a few thousand dollars. Then they go out and spend it, but the supply doesn't go up with it. That's where you get the inflation.

**Dani Berger** (3:16)
Well, to be fair, I mean, the president also, I remember getting a check signed by President Trump as well, and we also had the one big, beautiful bill, so both parties doing that. But Director Hassett, well taken on your point of Fed independence, I wonder why then you made these comments on Fox yesterday. You basically said that there are a majority of members over at the Fed who are voting, not because they're patriotic, but rather because they want to get Trump. Director Hassett, that sounds like trying to sway the Fed or challenging their independence by you, such a big part of this administration with such a senior role, making a comment like that.

**Kevin Hassett** (3:54)
Look, we've said over and over that we think that the previous version of the Fed had made a bunch of moves that looked to us to be partisan. And a lot of the people who decided to cut rates right ahead of the last election, to raise rates the minute that Donald Trump was inaugurated, a lot of those people are still around. Hang on, hang on, hang on, Director Hassett.