Hassett "AI could cause a slowdown in the labor market... new hiring may be delayed"

"AI raises labor productivity and a hiring slowdown appears"

"The employment slowdown is not a structural phenomenon"

Kevin Hassett, chairman of the White House National Economic Council (NEC), said the spread of artificial intelligence (AI) could put the labor market into a temporary stagnation phase. He analyzed that AI is significantly raising labor productivity, leading to a slowdown in companies' demand for new hires.

Hassett appeared on CNBC on the 17th (local time) and said regarding recent labor market conditions, "Employment indicators are sending mixed signals," and "on the other hand, there are very positive trends in real activity such as production and exports."

He mentioned that U.S. second-quarter gross domestic product (GDP) grew steadily and said, "As companies see existing employees' productivity greatly increase thanks to AI, there are many situations where they do not need to fill new positions immediately," forecasting, "There may be a period when the labor market is quiet for a while, that is, a phase in which hiring is stagnant."

However, Hassett emphasized that this employment slowdown is not a structural phenomenon. He said, "Because production and income growth are strong, the market will quickly find balance," and "as new consumer demand and investment outlets emerge, employment is likely to expand again."

Concerns that AI will replace entry-level jobs or new hires have long been raised. However, it is unusual for a senior economic official in the Trump administration to publicly acknowledge this. Since taking office, President Trump has designated the AI industry as a strategic sector for development and has actively pushed to expand related infrastructure such as data centers.

Earlier this month, David Sacks, the White House official in charge of AI and cryptocurrency policy, stated, "There is no federal bailout for the AI industry." This was a response to OpenAI's mention of an indirect federal guarantee to expand infrastructure investment.

Meanwhile, Hassett's remarks came as President Trump recently refocused his main messaging on the burden of living costs. This is interpreted as a response strategy to the successive victories of Democratic candidates who concentrated on the 'cost of living' issue in key elections held earlier this month.

Hassett said, "Contrary to the president's remark that grocery prices have come down in a second Trump term, overall grocery prices have not actually fallen." However, he argued, "The prices that surged during the Biden administration are no longer rising, and household purchasing power has rather improved."

New York=Shin-young Park, correspondent nyusos@hankyung.com