NEC Director Kevin Hassett on May Jobs Report: This Is a Job Market That's Hitting on All Cylinders

Why It Matters

Robust, supply‑driven job growth challenges traditional inflation‑wage trade‑offs, shaping Fed policy and underscoring AI’s emerging role in hiring.

Key Takeaways

• May jobs report shows 170k hires, upward revisions 100k.
• Hassett attributes boom to supply‑side policies, not Phillips curve.
• Federal hiring cuts 300k; local hiring surge due to seasonal factors.
• He argues Fed should pause hikes, consider rate cuts.
• AI adoption is boosting hiring at firms that implement it.

Summary

Kevin Hassett, director of the National Economic Council, opened the interview by highlighting the May jobs report’s headline‑grabbing numbers – 170,000 jobs added and an upward revision of roughly 100,000 jobs for the previous month. He framed the data as evidence of a labor market “hitting on all cylinders,” driven by President Biden’s supply‑side agenda, including tax cuts on tips and overtime, incentives for new factories, and historically low quit and layoff rates.

Hassett emphasized that the surge is not a classic Phillips‑curve phenomenon; instead, it reflects policy‑induced productivity gains that allow growth without stoking inflation. He noted that while federal employment fell by more than 300,000 permanent positions, state and local hiring rose sharply, a seasonal pattern amplified by summer‑time needs such as trash removal and school‑year transitions.

The conversation turned to monetary policy, with Hassett arguing the Fed can afford to pause rate hikes and even contemplate cuts, given the supply‑side nature of the boom. He also addressed concerns about AI, saying firms that have adopted artificial intelligence are seeing robust hiring, whereas companies lagging on AI remain stagnant, suggesting technology is reshaping the employment landscape.

If Hassett’s interpretation holds, policymakers may lean toward a more accommodative stance, reinforcing supply‑side reforms while monitoring inflation. The AI hiring trend signals that future job growth could become increasingly tied to technology adoption, raising questions about workforce readiness and equitable benefit distribution.

Original Description

White House National Economic Council Director Kevin Hassett joins 'Squawk Box' to discuss the May jobs report, state of the economy, impact on the Fed's interest rate outlook, and more.