• Kevin Hassett, former Trump economic adviser, argues AI is boosting productivity and temporarily softening labor markets
  • He characterizes current hiring slowdown as a short-term adjustment, anticipating new AI-driven demand will create jobs
  • Hassett frames AI expansion as outpacing 1990s dot-com boom in economic impact

Kevin Hassett, who served as director of the National Economic Council under former President Donald Trump, has offered a nuanced take on artificial intelligence's labor market effects that acknowledges short-term disruption while dismissing fears of widespread unemployment.

In recent comments that mark a notable departure from typical Trump-aligned messaging that emphasizes only AI's benefits, Hassett pointed to what he called "labor-market softness" as evidence that companies are leveraging AI tools to enhance worker productivity. According to people familiar with his thinking, this productivity surge is allowing firms to slow or pause hiring, particularly for new graduates and entry-level positions.

"What we're seeing is AI sharply raising worker productivity, which means companies need fewer additional workers to maintain or grow their output," Hassett reportedly stated. "This explains some of the recent hiring caution we've observed, especially in white-collar sectors where generative AI tools are being deployed."

Yet Hassett was quick to characterize this as a temporary phenomenon rather than a structural shift toward mass unemployment. He anticipates what he called a "calm period" in hiring—likely lasting months rather than years—before rising output and incomes create new consumption patterns and corresponding job opportunities.

"I don't anticipate mass job losses from AI," Hassett emphasized. "Instead, I expect a short adjustment period followed by job creation as the economy adapts to higher productivity levels."

The former economic adviser went further, suggesting the current AI wave represents an economic transformation that's accelerating faster than the 1990s dot-com boom in terms of productivity gains and structural change. His comments come as the Trump administration continues to promote rapid AI development through deregulation and infrastructure support while publicly downplaying displacement risks.

Hassett's analysis carries potential policy implications, particularly for Federal Reserve decision-making. He suggested that AI-driven labor market softening could justify additional monetary easing, specifically mentioning the possibility of another 25-basis-point rate cut if current trends persist.

"The Fed should be truly data-driven in its approach," Hassett noted, according to sources familiar with his remarks. "If AI is boosting productivity while moderating hiring, that's relevant information for their policy calculus."

Industry observers note that Hassett's acknowledgment of AI-related job displacement—however temporary—represents a subtle shift in conservative economic messaging. While Trump-aligned officials typically emphasize AI's innovation benefits, Hassett's comments explicitly tie real-time labor market data to AI adoption, suggesting a more complex economic narrative is emerging.

Attempts to reach Hassett for additional comment were unsuccessful, but sources close to him indicate he remains optimistic about AI's long-term economic impact. He reportedly pointed to rising real wages and purchasing power as evidence that productivity gains are already translating to improved living standards, even as many households continue to face cost-of-living pressures.

Correction: An earlier version of this article misstated the timing of Hassett's comments. They were made recently, not during his tenure in the Trump administration.