Hassett: June NFP Will Be Strong Again; AI Deflationary Effect Makes Rate Hike Case Insufficient
0xBroomberg
White House economic adviser Hassett flagged another strong June jobs print while arguing AI-driven deflation removes the case for rate hikes — the White House is betting on a contradictory combo of hot jobs and easy money.
What exactly did Hassett say?
National Economic Council Director Kevin Hassett said on CNBC Monday that, based on "every sign we're seeing," Thursday's June nonfarm payrolls report should show "another strong number."
He added that rapid gains in U.S. AI productivity carry a deflationary effect — AI lets firms produce more with fewer people and lower costs, pushing prices down — so the case for raising rates is not there.
This means → the White House is sending two signals at once: the economy is strong, but don't hike. That is a politically charged combination.
Why do those two claims sit uneasily together?
Standard logic: strong hiring = overheating risk = reason for the Fed to hike. Hassett says hiring is strong but hikes are unwarranted.
His bridge is "AI deflation" — AI lifts efficiency and compresses costs, so even robust job growth will not push prices out of control.
In plain terms = the White House is arguing that more jobs do not mean higher prices, because AI makes each worker's output worth more — so the Fed should leave rates alone.
What does this mean for markets?
The stance clashes with recent hawkish repricing in parts of the market — traders are pricing in possible hikes while the White House says they are unnecessary.
Thursday's June payrolls are the last major employment reading before the Fed's July meeting, and the actual number will decide which narrative wins.
This means → if payrolls come in hot and inflation has not clearly cooled, the White House's "AI deflation" story faces a direct market test.
Content is for reference only, not financial advice.