00:00The U.S. economy added 57,000 jobs in June.
00:03That missed expectations, even though the unemployment rate, it did come in to 4.2%.
00:08The expectation was 4.3%.
00:10Let's bring in White House National Economic Council Director Kevin Hassett.
00:14Director Hassett, thank you so much for joining us.
00:17I was just speaking with Rick Reeder of BlackRock, who you knew well, who at one point was interviewing.
00:22Yes, at one point was interviewing for the same job you were over at the Fed.
00:25He basically described the jobs picture as thus.
00:28That's stable, but I would say broadly unimpressive.
00:32Would you agree, unimpressive but stable?
00:34No, I would say that it's on an upward trajectory.
00:39Three of the last four months surprised out the upside, as you know.
00:42There were a little bit of downward divisions.
00:43This one came in a little bit below expectations, but if you lift up the hood,
00:48then the basic story that we think is animating the economy right now is that there's a construction boom.
00:56It's the biggest construction boom we've ever had, in part because in the big, beautiful bill,
01:00we allowed people to expense factory construction.
01:02The president talks about all the time about all the commitments to onshore U.S. activity,
01:07and that's showing up in construction employment, which was up a lot this month.
01:11But the factories have to be turned on before the jobs go back up into the one, 200,000 range.
01:17And so I actually have been a little surprised on the upside by the job market because it's been north
01:23of 100 quite a bit.
01:25And because we don't have a massive inflow of illegal immigration, then that makes the break-even job number a
01:33little bit lower.
01:33And so I think this is a really strong, healthy job market, and that this was a little bit on
01:38the other side of expectation,
01:39but the trend over three or four months is consistent with our view that, again, that we were growing about
01:443%
01:45and that we're going to have a better second half of the year as those factories turn on the lights.
01:49And, Kevin, you've been consistent on that, but you've also been consistent on this.
01:52You were saying this just a month ago.
01:53The Fed is behind the curve.
01:55Plenty of room to cut.
01:56What you're describing does not sound like an economy that needs a cut.
02:01Well, I think that, again, what one has to do, and right now we've got Kevin Wurst there.
02:07It's different leadership, and we very much respect the independence of the Fed.
02:11I think that Kevin will watch the data and do what he thinks is right, and we'll support him in
02:15that.
02:16I think that as an abstract principle, going back a month ago on the show or anywhere else I've been
02:22speaking,
02:22I've been highlighting the fact that the old-fashioned Phillips curve that says if you have growth, you have to
02:28raise rates,
02:29doesn't apply in situations where there are big, positive supply shocks.
02:33And so if there's a big, positive supply shock, you know, like you have an economy with an apple tree,
02:38you plant another apple tree, now you've got a lot more apples, the price of apples goes down.
02:42And with AI basically increasing productivity of firms all across the country, then that's increasing their output.
02:48We're seeing it in real GDP numbers, but not putting upward press rod prices.
02:52Now, on the other hand, if you mail checks to people, as Joe Biden did, then they all of a
02:56sudden, you know,
02:57open up their mailbox, so they got a few thousand dollars, then they go out and spend it,
03:00but the supply doesn't go up with it.
03:02That's where you get the inflation that we saw.
03:03Well, to be fair, I mean, the president also, I remember getting a check signed by President Trump as well,
03:08and we also had the one big, beautiful bill, so both parties doing that.
03:11But, Director Hassett, well taken on your point of Fed independence.
03:14I wonder why then you made these comments on Fox yesterday.
03:18You basically said that there are a majority of members over at the Fed who are voting not because they're
03:26patriotic,
03:26but rather because they want to get Trump.
03:29Director Hassett, that sounds like trying to sway the Fed or challenging their independence by you,
03:35such a big part of this administration with such a senior role, making a comment like that.
03:41Look, we've said over and over that we think that the previous version of the Fed
03:45had made a bunch of moves that looked to us to be partisan,
03:48and a lot of the people who decided to cut rates right ahead of the last election,
03:53to raise rates the minute that Donald Trump was inaugurated, a lot of those people are still around.
03:57Hang on, Hang on, Hang on, Dr. Hassett.
03:58I've got to push back because they cut by 175 basis points from late 2024 through the 2025.
04:05That doesn't seem like something that's moving against Trump.
04:09That's allowing the White, that's giving the White House effectively what it wants.
04:12They're moving towards normalcy, and I hope that they continue under the firm and solid leadership of Kevin Warsh.
04:20I hope that they now move into a direction where they're data dependent.
04:23I think that if you look back at their history, going all the way back to when President Trump was
04:27inaugurated,
04:28they weren't always data dependent, and I'm hoping that they reachieve that status.
04:32That's what I was saying yesterday.
04:33Are there certain members of this Federal Reserve that you are in particular concerned about, Director Hassett?
04:40I think it's extremely unorthodox that Jay Powell hasn't dropped out.
04:45The former chair sitting there is a very unorthodox thing.
04:47It's the first time in history, and I'm concerned about what his motivations for that are.
04:52Yes, of course.
04:53But in the end, this is a problem that Kevin Warsh is going to work out.
04:56He's now the chairman of the Fed, and we have enormous confidence.
04:59I was going to say, Director Hassett, just on that point, do you think that the White House needs to
05:05get more involved then?
05:06Do you think that there should be further investigations around Jay Powell?
05:10Should there be methods, much like with Lisa Cook, to see if changes can be made to this FOMC to,
05:16again, in your words,
05:18remove people who you are concerned that are moving more along the politics and the data?
05:22I think the Fed needs to do its job, and they've got great leadership there,
05:26and we're going to hope for the best. We're going to hope for the best.
05:30What about when it comes to Lisa Cook?
05:33We had, obviously, the Supreme Court decision saying she can stay on for now.
05:37Does the White House intend to push some of these mortgage fraud allegations?
05:41Are there going to be continued actions there?
05:44Well, I think we respect the judgment of the courts,
05:46and we'll look forward to seeing how the situation evolves.
05:51So does that mean you still are active in this case against Lisa Cook?
05:54That it's not necessarily something that the White House is going to back off of?
05:59It's saying that I don't make law enforcement decisions.
06:02Okay, okay, Director Hassett. I understood that.
06:05I still just, on this point of what the Fed should do and their ability to cut,
06:09we had core PCE crawl back up to 3.3% in April.
06:15Headline figures get to 4% in May.
06:17I just wonder where you see some of the partisan concern,
06:20because most people in that position would just pause and wait and not try to push in rate cuts.
06:26I just want to know where in the data you're seeing, besides Jay Powell staying on,
06:30I understand your point there, where else are you seeing some concerns of partisanship
06:34or at least dismay or direct action that seems to be against this president?
06:39None, really none whatsoever since Kevin Walsh has been there.
06:41And so we think that we've got the right man for the job there right now,
06:45and we think he's going to follow the data and convince his colleagues to do so.
06:49And that's our expectation.
06:51What do you make, then, of Kevin Walsh's sort of approach to not give forward guidance?
06:59Do you think that this is welcome?
07:00And is the White House concerned at all about market volatility that might arise from that?
07:05You know, President Trump chose Kevin Walsh because he was by far the best person for the job,
07:09and I agree with that judgment.
07:11If he thinks that the forward guidance isn't useful,
07:14and the argument for that would be that it hasn't actually been that accurate,
07:18and so people would say we're going to do this, and then they do that,
07:21then what use is the forward guidance?
07:23I've not done a full academic review of forward guidance and its ability to predict the future,
07:28but I know that Kevin Walsh is a person who believes that the forward guidance hasn't been that useful.
07:35But in the end, he's continuing it right now,
07:37and he'll decide whether he thinks it's a useful communication tool for the Fed or not.
07:42That's his judgment.
07:43Director Hassett, I asked you about one Supreme Court decision.
07:45I want to finish just on one other one, Trump v. Slaughter,
07:49in which the Supreme Court did say that this president administration has more room
07:53to let go various heads or various senior people of different independent regulatory bodies
08:01within the United States.
08:03Does this give you and the team more firepower?
08:05Is there anyone else you are concerned about at some of these agencies that you would like to see let
08:10go?
08:11The president has built an amazing team of people that I love working with every day,
08:15and I think that the Supreme Court judgment is just that within the executive branch,
08:20the chief executive has the right to build the team that he thinks he can work with.
08:24And I think we've got a team that's firing on all cylinders right now.
08:28Whether there's another person that the president thinks that could be changed out
08:33and improve the caliber of the team, that's his judgment.
08:36But I think that it's an appropriate decision that the executive branch leader,
08:40the president of the United States, gets to pick his own team.
