AI could cause quiet labor market
Kevin Hassett, the Trump administration’s top economic adviser, said Monday that artificial intelligence could increase worker productivity so much that companies could slow hiring.
“I think there are mixed signals in the labor market,” the director of the National Economic Council said on CNBC’s “Squawk Box,” adding that he sees “really very positive signals in the manufacturing markets.”
After noting that U.S. gross domestic product is growing at a strong pace in the second quarter of 2025, Hassett said: “There may be a little bit of a quiet period in the labor market, almost, because companies are seeing that AI is making their workers so productive that they don’t need to hire kids fresh out of college, etc.”
But he argued that any AI-driven softness in the market would be temporary.
“Because there’s a lot of output growth and income growth, that’s the kind of thing that the free market will operate relatively quickly as, you know, new ways of spending money emerge,” Hassett said.
Fears about AI replacing entry-level jobs are hardly new, but they have rarely been voiced by the Trump administration, which has supported the nascent industry and taken steps to expand its development in the United States.
President Donald Trump signed multiple signatures administrative orders It aims to reduce regulatory hurdles and encourage the development of AI infrastructure, including data centres.
Trump’s AI and cryptocurrency “czar” David Sacks said in early November that “there will be no federal bailout for AI.” This statement comes after OpenAI CFO Sarah Friar said her startup wants a federal “backstop” to support infrastructure investments. Friar later retracted this comment.
Hassett’s comments come as Trump and his allies seek to refocus their message on affordability; Democratic candidates focusing on this issue won big in the general elections earlier this month.
Hassett said Monday that overall grocery prices have not fallen during Trump’s second term. claims the opposite.
“People are still trying to dig out of the huge hole left by the previous administration’s policies,” he said.
He said the average monthly cost of groceries has increased during the Biden administration and has “almost never increased” since Trump returned to the White House.
Hassett added that “purchasing power has increased.”
“It’s surprising to me that the cost issue is somehow being blamed on us,” he said.
