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White House NEC Director Kevin Hassett Talks Trump-Warsh Talks
Brief
Hassett also ran through medium‑term supply‑side math: productivity 'north of 2.5%' plus ~1% from capital spending gives 3–3.5% baseline GDP without labor, while labor's contribution has waned. He said weekly earnings are up relative to inflation (citing figures he attributed to different sectors). On policy, Hassett stressed respect for Fed independence while noting close presidential contact with figures like Kevin Warsh, defended recent White House budget moves (claiming deficit/GDP will fall over ten years and federal employment is down >300k), and credited U.S. energy steps for stabilizing prices. He warned against 'socialism'—which he defined as government ownership of capital—in arguing Democrats' tax and redistribution proposals risk shifting policy toward government control, and he rejected characterizing recent government equity stakes as socialism because, he said, they do not entail operational control. Hosts probed tensions on Fed policy, antitrust and the fiscal tradeoffs, but largely left with Hassett portraying the current data as a non‑alarm signal that merits watching future prints.
Why it matters
Kevin Hassett (White House NEC Director) said U.S. employers unexpectedly cut 23,000 jobs in July, and the unemployment rate fell mainly because labor force participation fell; he estimated the 'break-even' monthly jobs number has declined from roughly 120–130k to about 40k due to border policy, deportations and baby‑boomer retirements.
Key details
- Hassett noted the composition of July's print: private‑sector job creation was approximately at the new break‑even level, government employment fell by about 50,000, and hospitality employment declined after the World Cup — excluding government and hospitality, he said the underlying payroll gain was about 100,000.
- On growth drivers, Hassett put labor‑adjusted potential GDP (productivity + capital) at roughly 3.0–3.5% — citing productivity 'north of 2.5%' and capital spending adding ~1% — while saying labor's contribution, historically ~1–1.5% annually over 40 years, has likely fallen to one‑half or one‑third of that.
- Hassett claimed weekly earnings are up relative to inflation, giving specific figures he said were 'about $1,000 overall for all Americans, about $3,000 for manufacturing workers, $4,000 for construction workers.'
- On fiscal and energy policy, Hassett said the President's budget aims to drive deficit/GDP down 'almost to nothing' over ten years, highlighted a reduction of federal employment by more than 300,000, touted the Vice President's fraud task force as recovering 'tens and tens of billions' annually, and argued U.S. actions (more pipeline production and Jones Act flexibility) stabilized global energy markets and helped prevent a large oil spike.