Kevin Hassett, who served as director of the National Economic Council during the Trump administration, suggested that artificial intelligence is contributing to a temporary slowdown in hiring. Speaking on CNBC’s “Squawk Box,” Hassett explained that companies are experiencing such significant gains in employee efficiency due to AI tools that they are less inclined to expand their workforces.
He described the current phase as a potential “lull” in labor market activity, noting that businesses may not feel the immediate need to bring on recent graduates or entry-level staff. Despite this pause, Hassett expressed confidence that AI-driven economic expansion will ultimately lead to job creation over time.
According to him, the surge in output and income fueled by AI will naturally stimulate new consumer demands, prompting markets to adapt and generate fresh employment opportunities.
Research from Stanford University supports early signs of labor displacement, showing that AI tools have already begun to replace junior software developers. The study projects a nearly 20% drop in employment among 22- to 25-year-old coders by July 2025 compared to hiring levels at the end of 2022.
The Trump administration actively supported AI innovation through regulatory reforms and major infrastructure investments, including backing for data centers via initiatives like the $500 billion Stargate Project.
Labor statistics from August revealed only 22,000 nonfarm jobs were added, falling far short of the 80,000 expected by financial analysts. The unemployment rate also rose to 4.3%, the highest since October 2021. Since the federal government shutdown, no updated employment figures have been released. However, corporate announcements indicate ongoing workforce reductions: Amazon plans to cut around 14,000 corporate positions, while Target intends to eliminate 1,000 white-collar roles to streamline overlapping functions.
The White House has not yet responded to requests for comment on these developments.
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Kevin Hassett, a top Trump economic advisor, said that AI is bringing about a ‘quiet time’ in the labor market
A top Trump administration economic advisor has a theory on the labor market freeze. n nKevin Hassett, director of the National Economic Council, told CNBC ‘s “Squawk Box” on Monday that AI may be pushing worker productivity so high that employers are stepping on the brakes on hiring. n n”There could be a little bit of, almost, quiet time in the labor market,” Hassett told show host Joe Kernen, “Because firms are finding that AI is making their workers so productive that they don ‘t necessarily have to hire the new kids out of college and so on.” n
Hasset, however, maintains the position that AI will eventually create more jobs in the long run. n
“Because there ‘s so much output growth and income growth, that ‘s the kind of thing that a free market will work out relatively quickly as, you know, new ways to spend money emerge,” Hassett said. n
A study by a team of researchers at Stanford University found that AI is already replacing entry-level coders, causing a nearly 20% decline in employment of 22- to 25-year-old developers by July 2025 in comparison to the hiring peak in late 2022. n
The Trump administration has aggressively promoted AI development. Trump has signed several executive orders aimed at easing regulations and expanding AI infrastructure, including initiatives to promote data center growth, such as the $500 billion Stargate Project. n
The latest available data from the Bureau of Labour Statistics shows that in August, employers added just 22,000 nonfarm jobs, which fell well below Wall Street ‘s expectation of 80,000. The unemployment rate also ticked up to 4.3% in August, its highest level since October 2021, when the economy was still recovering from the pandemic. n
No new jobs data have been released since the government shutdown, but in October alone, Amazon announced plans to eliminate about 14,000 corporate roles, while Target said it would cut 1,000 white-collar jobs to remove what it described as “overlapping work.” n
The White House did not immediately respond to a request for comment.