Director, National Economic Council of the United States
Markets 'Terribly Wrong' to Price in Rate Hike: Hassett
The markets are "terribly wrong" to price in an interest rate hike by the Federal Reserve, says National Economic Council Director Kevin Hassett. He speaks on "Bloomberg Open Interest." US job growth topped all estimates in May.
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About Kevin Hassett
Kevin Hassett, Director of the National Economic Council, has been a frequent public spokesperson for the Trump administration’s economic policies. In press briefings and media appearances, he has characterized the U.S. economy as experiencing a "supply-side boom" driven by administration policies such as deregulation, tax cuts, and tariffs. He cited the May 2026 jobs report of 172,000 added jobs as evidence of this, stating that the number beat the highest forecast in a Bloomberg surveyched. Hassett has argued that the Federal Reserve should not raise interest rates in response to the jobs data, describing the growth as a "supply-side jobs number" that allows for growth without runaway inflationichel. Hassett has also addressed high gas prices and inflation, which he described as a "temporary energy shock" caused by the closure of the Strait of Hormuz. He stated that the administration expects prices to fall once the strait reopens, predicting that oil will flow "like you've never seen before" due to excess capacity from countries like the UAE. When questioned about low consumer sentiment, Hassett argued that the widely cited University of Michigan survey is "extremely partisan" and suggested it should be renamed "political sentiment," pointing to a separate Conference Board survey that he said showed higher confidence. He has also promoted the use of artificial intelligence by small businesses, claiming that firms using AI saw their sales double.
Transcript (12 segments)
✨ AI-enhanced transcript with speaker attribution
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Bloomberg Host0:00
This is Bloomberg. Welcome to our global TV and radio audiences. In May, the U.S. economy added 272,000 jobs, far exceeding all estimates. Let's bring in White House National Economic Council Director Kevin Hassett. Frankly, congratulations are in order. This is an unambiguously good number, upward revision in the last month. Does this foreshadow the risk of a broadening inflation?
K
Kevin Hassett0:30
No, absolutely not. It's a great question. The bottom line is, what is going on, because the President has recruited from companies around the world $18 trillion of new investment and we are seeing, if you look at the advanced durables numbers, equipment investment through the roof, up 3% in March, one of the biggest months we have seen. People are building factories, creating jobs, creating the golden age, the boom that is a logical supply-side response to the big beautiful bill, no tax on tips, no tax on overtime and arrest. We are seeing the benefit of that. You might recall when we were talking about this a year ago, lots of naysayers said we couldn't even have positive jobs numbers because of our immigration policy. The fact is we are getting positive jobs numbers because we have high wage growth, native-born Americans are rushing into the labor market in droves. Finally, we really love going to the Bloomberg data. We have this thing that I like to look at, the probability distribution of the forecast of all the jobs numbers before they came out. When I looked at it after I got these numbers, the very top person was low by about 40,000 jobs, which shows the Trump economy is surprising Wall Street analysts over and over again and they need to think about getting the supply their model fixed.
M
Matt1:57
It does surprise people to the upside for sure. I have heard since it passed a lot of positivity about the big beautiful bill, economic growth that it would create. We see 272,000 jobs, unemployment at 4.3%, but we see inflation at 3.8% on the PCE. It looks like to me Jay Powell was right on time. Now the market is pricing in a hike. Is that wrong?
K
Kevin Hassett2:26
I think that is terribly wrong. What you need to do is look at the impact of oil price shocks on core inflation and history of it is that they are temporary, don't be too lasting inflation. People see through it and don't adjust up their inflation expectations. My advice to the Fed, and I certainly respect their independence, thrilled to have a talented person like Kevin Warsh in there, is watch the numbers. With a big supply-side boom, you can have high growth without having runaway inflation. It is not a Phillips curve event at all. The last time this happened was the 1990s when Alan Greenspan saw through that and gave us some of the best years. If the Fed pays close attention to the data, thinks about why it keeps surprising on the upside, surprising on the downside on inflation. Absent the Gulf issue, the inflation basically would be under control right now.
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Matt3:24
How soon do you expect it to be wrapped up? That is almost completely within our power. We went there, maybe at the behest of Israel, but it was our decision to do that.
K
Kevin Hassett3:35
The President will make a call on that, negotiations are ongoing. I'm not a forecaster for when it will all end. Global markets should understand that risk premiums will be much lower going forward once we successfully take away the option for Iran to build a nuclear weapon. If you look at the crazy action they are taking in the Strait, even attacking Chinese boats, you can see how terrible it would be for the world if they had ballistic weapons. There is a short-term disruption in oil prices but we expect that to be over soon.
M
Matt4:13
Let's get back to the jobs picture because you mentioned the investment in equipment which makes sense following on the legislation you passed. Are we going to see manufacturing jobs come back to the U.S. economy? We don't really see job creation in the goods producing sector yet.
K
Kevin Hassett4:31
It is inching up. What is going way up is construction. Remember in the big beautiful bill, President Trump did something quite clever. For four years, we are going to allow people to expense factories. What is happening now, people are racing to build the factories. Once those buildings are up, they will put the machines in and create the jobs. So construction employment is way up. We think that is a leading indicator for what will happen in manufacturing over the next year.
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Matt5:00
We have seen an uptick in government jobs which I thought was surprising, I figured we would go the other way. We added 54,000 there, uptick in hiring in a lot of health care services, food and accommodations. Those are lower paid areas. Are you worried about the lower half of the K?
K
Kevin Hassett5:24
What we are seeing is wages across the board, real wages are going up on average about $3,000 since President Trump took office. Right now, the government jobs you talked about were really state and local jobs. They tend to be seasonal patterns that are not completely captured by seasonal adjustments. We have a lot of teachers that took off for the summer, took a job at the boardwalk and so on. That gets offset in September. That is probably what is going on because it is all state and local. We have cut federal government employment by more than 300,000 workers, and that is tax savings that will accrue to the benefit of the American people.
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Matt6:07
I was looking at the wage growth, 3.4%, PCE was 3.8%. How do you factor real higher wages?
K
Kevin Hassett6:19
You are looking at the latest number, I can send you an email. We aggregated it through since Trump took office, $3,000, as of the speech that we wrote for him a day or two ago.