We begin this morning with the director of the National Economic Council, Kevin Hassett. Good morning and thank you for being here.
It's great to be here in person.
Yes. There's a lot to get to with you, but I want to start on what just happened overnight. Russia has launched a very significant attack on Ukraine and in Kyiv, they actually even hit a Ukrainian government building. Does the US condemn the assault? And what are you waiting for now in terms of triggering those sanctions on Russia?
Well, as you know, I'm not one of the foreign policy advisers of the president, but at the National Economic Council, we are responsible for making sure that sanctions get enforced and that people that are helping Russia with their war against Ukraine, as for example India has been doing by buying Russian oil, that we're ready to respond to them economically. And, you know, last night's news is very disappointing. And I'm sure that there's going to be a lot of talk today and tomorrow about the level of sanctions and the timing of sanctions, the timing of additional sanctions on Russia. I mean, it's up to the president in the end, but yes, it's a very disappointing set of affairs.
On the US economy, there were 22,000 jobs added last month. The past two months of data were also revised down. You've said in interviews this week, it suggests there's less momentum here than you thought. Has job creation stalled and should the Federal Reserve be concerned about the jobs picture?
Right. Well, first of all, the interesting thing about the jobs numbers is that they had the biggest revisions in 50 years over the summer and we came in with 22,000 in August. But if you look at what they said in '23 and '24, they have two ways of estimating the jobs. There's something called the payroll survey where they ask the employers, how many people did you hire? Then they have something called the household survey where they call up people and they say, do you have a job? And over those two years, the payroll numbers said that we created four and a half million jobs. And the household survey said about 2 million fewer, about 2.5 million jobs. And they should have the same answer. And so for August, for example, the payroll survey said 22,000 and the household survey said 288,000. And so I think that what's going on is that these old-fashioned ways of surveying, like I wonder if you've ever gotten a survey in the mail and filled it out and mailed it back in, maybe you have, but I think that's the way they're trying to do it. And the reason we're getting these massive revisions and these numbers that don't make sense is really that we've got to modernize the way we do the labor data. But if you look at the non-labor data, second quarter GDP was revised up to 3.3%. The Atlanta Fed's GDP estimate for the third quarter right now is 3%. And so industrial production's at an all-time high.
But you believe all that data levels are functioning.
No, the point is when there's dissonance in data that you have to sort of watch how it all works out. And the thing that I'm most suspicious of right now in terms of data quality is the job number. In part because there are other ways to do it. There's this company called Homebase that does it. Their August number is 150. But again, even think about this. If we ask households how many jobs do they have, it's plus 288,000 in August. If we ask the employers, it's 22,000. Then that becomes a puzzle for economists. Like what is wrong with the data? And we kind of know what's wrong with the data. What's wrong with the data is people aren't filling out the forms and sending in the surveys.
Last month, the president fired the head of the Bureau of Labor Statistics, suggesting there was political bias, not just what you're talking about, which is a very technical issue on how data is collected and crunched. Did you fix the political bias or...
Well, there are patterns of the data that look like political bias, but they could be accidental. And that's why we need to get a new set of eyes in there to make sure that things are more transparent, that we modernize the surveys, and we make them so that more people trust them. Think about this at the Federal Reserve.
So, you don't trust these numbers from...
I think the BLS numbers need to really be approved. They need to be modernized. And I gave a talk at the BLS next to Alan Greenspan a few years ago where I talked about the necessity of modernizing them. And so I still agree with that position. But trendline-wise, when we hear from companies like Caterpillar, Deere, Ford, Procter & Gamble, that their costs are going up due to tariffs, that doesn't suggest there's going to be robust hiring in those sectors, right? When a company is taking on something that could hurt their productivity or profitability, I should say. Inflation has come down quite a bit. It was in the high threes when President Trump took office. The average over the six months is 1.9. And you know, even the Fed right now clearly agrees that inflation has been under control if you believe futures markets because the federal funds futures markets are now saying the Fed's going to cut interest rates three times this year. And so the Fed, they're expected to and so therefore, you know, the Fed is expected to feel like it's comfortable with where inflation is right now.
But my point being that doesn't forecast from these companies a scenario in which they would necessarily be hiring. Have you been able to calculate what the immigration crackdown has done to employment?
Well, yeah, there are a couple of things that we could look at. First of all, that private sector employment is up by about half a million this year and government employment is down by about 100,000. There's another thing is that most of the jobs that have been created in the US are for native born workers and there's actually been a reduction in labor supply for non-native born workers. And the other...
