Artificial intelligence is significantly enhancing worker productivity to such an extent that companies might feel less pressure to hire new staff, according to senior Trump administration economic adviser Kevin Hassett. The National Economic Council director made these remarks during a Monday appearance on CNBC's Squawk Box program.
Mixed Signals in Labor Market Amid AI Revolution
Hassett revealed he has observed "mixed signals in the job market" but simultaneously noted "really, really positive signals in the output markets." He specifically pointed to the strong US GDP growth recorded during the second quarter of 2025 as evidence of this trend.
The economic adviser suggested that American businesses could be experiencing what he described as a "quiet time in the labour market" primarily because artificial intelligence is making existing employees substantially more efficient. This increased efficiency might be leading companies to reconsider their hiring needs, particularly for entry-level positions.
"Companies may feel they don't necessarily have to hire the new kids out of college and so on," Hassett told CNBC, highlighting how AI could be changing traditional recruitment patterns.
Temporary Slowdown and Market Correction
Despite these observations, Hassett emphasized that any AI-driven cooling in the job market would likely be short-term in nature. He explained that rapid output growth and increasing income levels would enable the free market to naturally resolve these imbalances as new spending opportunities emerge.
"The rapid output and income growth would allow the free market to work out these imbalances," Hassett stated, expressing confidence in market mechanisms to correct any temporary disruptions caused by AI adoption.
Trump Administration's Pro-AI Stance
While concerns about AI replacing entry-level roles have circulated for some time, they are rarely voiced by Trump administration officials, who have consistently promoted the technology. President Donald Trump has signed multiple executive orders aimed at reducing regulatory barriers and expanding AI infrastructure, including data centers.
The administration's position on AI support became clearer earlier this month when Trump's AI and cryptocurrency "czar" David Sacks declared there would be "no federal bailout for AI." This statement came in response to OpenAI CFO Sarah Friar's initial call for a federal "backstop" to support infrastructure investments, which she later retracted.
Economic Context and Affordability Debate
Hassett's comments arrive as Trump and his allies attempt to shift focus toward affordability concerns, following Democratic gains by emphasizing cost-of-living issues. The economic adviser acknowledged that grocery prices haven't decreased during Trump's second term, despite the president's claims to the contrary.
Hassett argued that Americans are still "trying to dig out from the big hole that was dug by the previous administration's policies," while maintaining that prices have "gone up almost not at all" since Trump returned to office. He further claimed that "purchasing power has gone up" under the current administration.
The intersection of AI advancement and labor market dynamics continues to be a critical area of focus for economists and policymakers alike, with the Trump administration maintaining a generally optimistic outlook about technology's long-term benefits despite short-term adjustments in hiring patterns.
