The Trump administration's chief economic adviser has a theory about labor market freeze.
Kevin Hassett, director of the National Economic Council, said Monday on CNBC's “Squawk Box” that artificial intelligence could improve productivity so much that employers are stalling their hiring efforts.
“There may be a bit of a lull in the job market,” Hassett told show host Joe Kernen, “because companies are finding that AI is making their workers so productive that they don't necessarily need to hire new kids out of college and so on.”
Hassett, however, is of the opinion that in the long term, AI will ultimately create more jobs.
“Because there is so much growth in output and income, the free market will work relatively quickly because, you know, there will be new ways to spend money,” Hassett said.
A study by a team of researchers from Stanford University found that A.I. replacement of entry-level encoderswhich will see employment among developers aged 22 to 25 decline by nearly 20% by July 2025, compared to the hiring peak at the end of 2022.
The Trump administration is actively promoting the development of artificial intelligence. Trump has signed several executive orders aimed at easing regulations and expanding artificial intelligence infrastructure, including initiatives to promote data center growth such as The $500 Billion Stargate Project.
The latest available data from the Bureau of Labor Statistics shows that employers added just 22,000 nonfarm payroll jobs in August, well below Wall Street's expectations of 80,000. The unemployment rate also rose to 4.3% in August, the highest level since October 2021, when the economy was still recovering from the pandemic.
No new jobs data has been released since the government shutdown, but only in October Amazon announced plans to eliminate about 14,000 corporate positions, and Target said it would cut 1,000 white-collar jobs to eliminate what it called “overlapping jobs.”
The White House did not immediately respond to a request for comment.
