Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: In May, the US economy added one hundred and seventy
Speaker 2: two thousand jobs, far exceeding all estimates. Let's bring in
Speaker 2: White House National Economic Council Director Kevin Hassett, and I mean, frankly,
Speaker 2: congratulations are in order, Kevin. This is an unambiguously good
Speaker 2: jobs number and upward revision in the last month. Does
Speaker 2: it foreshadow the risk of broadening inflation?
Speaker 1: No, absolutely not, And in fact it's something that it's
Speaker 1: a great question, Matt that the bottom line is that
Speaker 1: what's going on.
Speaker 3: Is because the President has recruited.
Speaker 1: From companies around the world eighteen trillion dollars a new investment,
Speaker 1: and we're seeing if you looked at the advanced Herbuls numbers,
Speaker 1: you know, equipment investment through the roof up three percent.
Speaker 1: You know in March one of the biggest months we've
Speaker 1: ever seen. That people are building factories, creating jobs, jobs,
Speaker 1: creating the Golden Age, the boom. That is a logical
Speaker 1: supply side response to the big beautiful bill, the no
Speaker 1: tax on tips and no tax on overtime and the rest.
Speaker 1: And so we're seeing the benefit of that. And you
Speaker 1: might recall that when we were talking about this a
Speaker 1: year ago, there are a lot of naysayers who said, well,
Speaker 1: we can't possibly even have positive jobs numbers because of
Speaker 1: our immigration policy.
Speaker 3: But the fact is that we're getting.
Speaker 1: Positive jobs numbers because we've got high wage growth and
Speaker 1: native born Americans are rushing into the labor market in droves,
Speaker 1: and so that negative story has gone and find they
Speaker 1: got to say, we really love going through the Bloomberg data,
Speaker 1: and we have this thing that I like to look at,
Speaker 1: which is the probability distribution of all the forecasts for
Speaker 1: the job's number before it comes out. And when I
Speaker 1: looked at it after I got these numbers, I saw
Speaker 1: that the very very top person was low by about
Speaker 1: forty thousand jobs, which shows that the Trump economy is
Speaker 1: surprising Wall Street analysts over and over again, and they
Speaker 1: need to maybe think about getting the supply side of
Speaker 1: their model fixed.
Speaker 2: It does surprise people to the upside, for sure. I
Speaker 2: hear a lot of I have heard since it passed
Speaker 2: a lot of positivity about the big beautiful bill and
Speaker 2: the economic growth that it would create. We see one
Speaker 2: hundred and seventy two thousand jobs, We see unemployment at
Speaker 2: four point three percent, but we see inflation at three
Speaker 2: point eight percent on the PCEE, so it.
Speaker 3: Looks kind of like too late.
Speaker 2: Powell was right on time, and now the market is
Speaker 2: pricing in a hike.
Speaker 3: Is that wrong? Yeah, I think that's terribly wrong.
Speaker 1: The bottom line is that what you need to do
Speaker 1: is look at the impact of oil price shocks on
Speaker 1: core inflation, and the history of it is that they're temporary.
Speaker 1: They don't lead to lasting inflation, that people see through
Speaker 1: it and don't adjust upward their inflation expectations. And so
Speaker 1: my advice to the FED, and I certainly respect their independence,
Speaker 1: and I'm really thrilled to have a talented person like
Speaker 1: Kevin Wurst there is watch the numbers, because what you're
Speaker 1: going to see is that with a big supply side boom,
Speaker 1: that you could have high growth without having runaway inflation.
Speaker 1: It's not a Phillips curve event at all. And the
Speaker 1: last time this happened was the nineties when Alan Greenspan
Speaker 1: saw through that and gave us some of the best
Speaker 1: years we ever had. And I think that we have
Speaker 1: that opportunity right now if the FED, you know, pays
Speaker 1: close attention to the data and thinks about why it
Speaker 1: keeps surprising on the upside them especially and surprising on
Speaker 1: the downside on inflation, I mean, absent the Gulf issue,
Speaker 1: you know, the inflation basically would be completely under control
Speaker 1: right now.
Speaker 2: How soon do you expect that to be wrapped up?
Speaker 2: Because that's almost completely within our power, right we went
Speaker 2: in there, maybe at the behest of Israel, but it
Speaker 2: was our decision to do that.
Speaker 1: Well, the President will will make the call on that.
Speaker 1: I mean, negotiations are ongoing, and I'm not a forecaster
Speaker 1: for when it's all going to end. But the bottom
Speaker 1: line is that global markets should understand that risk premia
Speaker 1: are going to be much much lower going forward once
Speaker 1: we successfully take away the option for Iran to.
Speaker 3: Build a nuclear weapon. And you know, if you look
Speaker 3: at this.
Speaker 1: Sort of crazy actions that they're taking in the Straits,
Speaker 1: you know, even attacking Chinese boats for goodness sakes, then
Speaker 1: you can see how terrible it would be for the
Speaker 1: world if they had ballistic missiles and nuclear weapons. And
Speaker 1: President Trump thinks that's unacceptable. And you know, of course
Speaker 1: there's a short term disruption and oil prices, but we expect.
Speaker 3: It to be over soon.
Speaker 2: Let's get back to the jobs picture because you mentioned
Speaker 2: the investment and equipment, which makes sense following on the
Speaker 2: legislation that you passed. Are we going to see manufacturing
Speaker 2: jobs come back to the US economy because we don't
Speaker 2: really see job creation in the goods producing sector yet.
Speaker 1: You know it's inching up. But what is going way
Speaker 1: up is construction. And remember in the Big Beautiful Bill
Speaker 1: that President Trump did something that was really quite clever
Speaker 1: where he said for four years, we're going to allow
Speaker 1: people to expense factories. And so what's happening right now
Speaker 1: is that people are racing to build the factories, and
Speaker 1: then once those buildings are up, then they'll put the
Speaker 1: machines in and create the jobs and so on. And
Speaker 1: so construction employment is way way up, and we think
Speaker 1: that that's like leading indicator for what's going to happen
Speaker 1: to manufacturing work over the next year or so.
Speaker 2: We have seen an optick in government jobs, which I
Speaker 2: thought was surprising. I figured we were going to go
Speaker 2: the other way, but we added fifty four thousand there,
Speaker 2: and an uptick in hiring in a lot of healthcare services,
Speaker 2: food and accommodations. Those are lower paid areas. Are you
Speaker 2: worried about the lower half of the K.
Speaker 1: Well, what we're seeing is that wages across the board
Speaker 1: real wages are going up on average about.
Speaker 3: Three thousand dollars since President Trump took office. And so
Speaker 3: you know right now the.
Speaker 1: Jobs, the government jobs that you talked about were really
Speaker 1: state and local jobs, and there tend to be kind
Speaker 1: of seasonal patterns in those things that aren't.
Speaker 3: Completely captured by seasonal adjustment.
Speaker 1: And so we have a lot of teachers that took
Speaker 1: off for the summer and maybe took a job at
Speaker 1: the boardwalk and so on, that kind of thing, and
Speaker 1: then it gets offset in September is probably what's going on.
Speaker 3: Because it's all local.
Speaker 1: We in the federal government have cut federal government employment
Speaker 1: by more than three hundred thousand workers, and that's like
Speaker 1: tax savings that is going to accrue to the benefit
Speaker 1: of the America people.
Speaker 3: For a long long time we did.
Speaker 2: I was just looking at the wage growth three point
Speaker 2: four percent and PC was three point eight percent. So
Speaker 2: how do you factor higher real wages?
Speaker 1: You're looking at the latest number and I can send
Speaker 1: you an email, but we've aggregated it through since when
Speaker 1: Trump took office, and the UMBER was three thousand as
Speaker 1: of a speech that we wrote for in a day
Speaker 1: or two ago.
Speaker 2: All right, well, that certainly is good news for the
Speaker 2: workers in this country. Kevin, great to get some time
Speaker 2: with you. Really appreciate your joining us. Kevin Hassett is
Speaker 2: the White House National Economic Council Director, talking to us
Speaker 2: on a day when the jobs numbers just came in
Speaker 2: far higher, as he pointed out, than the highest estimate.