The U.S. economy added 57,000 jobs in June that missed expectations, even though the unemployment rate came in at 4.2%. The expectation was 4.3%. 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 Reeder of Blackrock, who you knew well, who at one point was interviewing for the same job you were over at the fed. He basically described the jobs picture as stable, but I would say broadly unimpressive. Would you agree? Unimpressive but stable?
No, I would say that it's on an upward trajectory. Three of the last four months surprised on the upside. As you know, there were a little bit of downward revisions. This one came in a little below expectations. But if you lift up the hood, 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 this all the time, about all the commitments to onshore U.S. activity, and that's showing up in construction employment, which was up a lot this month. But the factories had to be turned on before the jobs go back up into the 200,000 range. And 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, that makes the break-even job number a little bit lower. So I think this is a really strong, healthy job market and that this was a little bit on the other side of expectations. But the trend over 3 or 4 months is consistent with our view that we were growing about 3% and that we're going to have a better second half of the year.
And Kevin, factories turn on the lights. 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. Mhm.
Well I think that again what one has to do, and right now we've got Kevin Warsh there. It's different leadership and we very much respect the independence of the fed. I think to Kevin, watch the data and do what he thinks is right, and we'll support him in that. I think that as an abstract principle, 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, 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 all of a sudden they open up their mailbox and get a few thousand dollars, so they go out and spend it, but the supply doesn't go up with it. That's where you get the inflation.
That would be fair. I mean, the president also, I remember getting a cheque 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 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, in such a big part of this administration with such a senior role, making a comment like that.
Look, look, we've said over and over that we think that the previous version of the fed had made a bunch of moves that look 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 hang on. I kind of push back because like by 175 basis points from late 2024 through 2025, that doesn't seem like something that's moving against Trump. That's giving the White House effectively what it wants. They're moving towards normalcy. And I hope that they continue under the firm and solid leadership of Kevin Warsh. I hope that they now move into a direction where they're data dependent. I think that if you look back at their history going all the way back to when President Trump was inaugurated, they weren't always data dependent. And I'm hoping that they achieve that status. That's what I was saying yesterday.
Are there certain members of this Federal Reserve that you are in particular concerned about? Director Hassett?
I think it's extremely unorthodox that Jay Powell has dropped out. The former chair sitting there is very unorthodox, I guess the first time in history, and I'm concerned about what his motivations for that are. Yes, of course. So in the end this is a problem that Kevin is just going to work out. He's now the chairman of the fed. And we have enormous confidence.
I was going to say, Director Hassett, just on that point, do you think that the White House needs to get more involved? Do you think that there should be further investigations around Jay Powell? Should there be methods, much like with Lisa Cook, just to see if changes can be made to this FOMC to again, in your words, remove people who you have concerns are moving more along politics than data?
I think the fed needs to do its job. And they've got great leadership there. And we're going to hope for the best.
