• Kevin Hassett forecasts AI will ultimately boost the U.S. economy similarly to computers, despite a temporary hiring "quiet period" as productivity surges.
  • The Trump administration is preparing a sweeping executive order to create a unified federal AI framework, potentially pre-empting state regulations to accelerate adoption.
  • Economists note that softening labor market data from AI-driven efficiency gains could push the Federal Reserve toward additional rate cuts.

Kevin Hassett, a senior White House economic adviser, has recently argued that AI will ultimately be a net positive for the U.S. economy, similar to the long‑run impact of computers, even though he expects a short‑term “quiet period” in hiring as firms adjust to rapid productivity gains. According to people familiar with the matter, Hassett’s comments reflect a broader administration push to position AI as a strategic growth engine while streamlining oversight.

Hassett has said AI is boosting worker productivity so fast that many firms are slowing hiring—especially of new graduates—because they can produce more with existing staff. He describes this as a temporary labor‑market “calm period,” predicting that strong output and income growth will eventually create new patterns of consumption and jobs, resolving the disruption via market forces. In a recent briefing, he framed AI as the next big general‑purpose technology, comparing the current boom to, and even faster than, the 1990s dot‑com/computer revolution.

Efforts to centralize AI regulation have hit a key milestone, with President Trump announcing plans for a sweeping national AI executive order that would create a single federal framework and pre‑empt many state‑level AI regulations. This move aims to avoid a patchwork of rules that could slow adoption, though it has sparked debate. Supporters argue unified rules will foster innovation, while critics, including some civil‑rights groups, warn it may weaken consumer and worker protections. Attempts to reach administration officials for further comment on the timing of the order were not immediately successful.

Parallel to these regulatory developments, Hassett has linked the AI-driven productivity surge to stronger real wages and purchasing power, asserting that living standards are improving despite lingering cost‑of‑living concerns. He highlights that average monthly shopping expenditures rose sharply under Biden but have “hardly increased” since Trump’s return, while real wages and purchasing power are, in his view, now rising. However, this optimism contrasts with recent election outcomes where Democratic candidates focusing on affordability won key races, suggesting voter skepticism about the distribution of economic gains.

On the monetary policy front, economists cited in recent coverage note that a softening labor market could push the Federal Reserve toward an additional 25‑basis‑point rate cut, as weaker hiring data would justify more easing. Hassett himself has called for the Fed to be “truly data‑driven” in this environment, emphasizing that AI adoption can temporarily reduce demand for entry‑level and routine jobs. This admission marks a shift, as previous Trump officials rarely acknowledged such risks publicly, intensifying debate about how to support displaced workers, especially young graduates.

Looking ahead, the short-term outlook includes likely continued rapid AI adoption, especially in white‑collar and analytical roles, with slower growth or outright declines in some entry‑level and routine jobs. Without a cohesive policy response, the transition could strain labor markets. In the long term, proponents like Hassett expect sustained AI‑driven growth, higher real incomes, and new sectors and occupations, echoing the historical effect of computers. The outcome will hinge on regulatory clarity, education systems, and safety nets to manage displacement.

Correction: An earlier version of this article misstated the timing of the proposed AI executive order; it is in the planning stages but not yet finalized.