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In May, the US economy added one hundred and seventy two thousand jobs, far exceeding all estimates. Let's bring in White House National Economic Council Director Kevin Hassett, and I mean, frankly, congratulations are in order, Kevin. This is an unambiguously good jobs number and upward revision in the last month. Does it foreshadow the risk of broadening inflation?
No, absolutely not, And in fact it's something that it's a great question, Matt that the bottom line is that what's going on.
Is because the President has recruited.
From companies around the world eighteen trillion dollars a new investment, and we're seeing if you looked at the advanced Herbuls numbers, you know, equipment investment through the roof up three percent. You know in March one of the biggest months we've ever seen. That people are building factories, creating jobs, jobs, creating the Golden Age, the boom. That is a logical supply side response to the big beautiful bill, the no tax on tips and no tax on overtime and the rest.
And so we're seeing the benefit of that. And you might recall that when we were talking about this a year ago, there are a lot of naysayers who said, well, we can't possibly even have positive jobs numbers because of our immigration policy.
But the fact is that we're getting.
Positive jobs numbers because we've got high wage growth and native born Americans are rushing into the labor market in droves, and so that negative story has gone and find they got to say, we really love going through the Bloomberg data, and we have this thing that I like to look at, which is the probability distribution of all the forecasts for
the job's number before it comes out. And when I looked at it after I got these numbers, I saw that the very very top person was low by about forty thousand jobs, which shows that the Trump economy is surprising Wall Street analysts over and over again, and they need to maybe think about getting the supply side of their model fixed.
It does surprise people to the upside, for sure. I hear a lot of I have heard since it passed a lot of positivity about the big beautiful bill and the economic growth that it would create. We see one hundred and seventy two thousand jobs, We see unemployment at four point three percent, but we see inflation at three point eight percent on the PCEE, so it.
Looks kind of like too late.
Powell was right on time, and now the market is pricing in a hike.
Is that wrong? Yeah, I think that's terribly wrong.
The bottom line is that what you need to do is look at the impact of oil price shocks on core inflation, and the history of it is that they're temporary. They don't lead to lasting inflation, that people see through
it and don't adjust upward their inflation expectations. And so my advice to the FED, and I certainly respect their independence, and I'm really thrilled to have a talented person like Kevin Wurst there is watch the numbers, because what you're going to see is that with a big supply side boom, that you could have high growth without having runaway inflation.
It's not a Phillips curve event at all. And the last time this happened was the nineties when Alan Greenspan saw through that and gave us some of the best
years we ever had. And I think that we have that opportunity right now if the FED, you know, pays close attention to the data and thinks about why it keeps surprising on the upside them especially and surprising on the downside on inflation, I mean, absent the Gulf issue, you know, the inflation basically would be completely under control right now.
How soon do you expect that to be wrapped up? Because that's almost completely within our power, right we went in there, maybe at the behest of Israel, but it was our decision to do that.
Well, the President will will make the call on that. I mean, negotiations are ongoing, and I'm not a forecaster for when it's all going to end. But the bottom line is that global markets should understand that risk premia are going to be much much lower going forward once we successfully take away the option for Iran to.
Build a nuclear weapon. And you know, if you look at this.
Sort of crazy actions that they're taking in the Straits, you know, even attacking Chinese boats for goodness sakes, then you can see how terrible it would be for the world if they had ballistic missiles and nuclear weapons. And President Trump thinks that's unacceptable. And you know, of course there's a short term disruption and oil prices, but we expect.
It to be over soon.
Let's get back to the jobs picture because you mentioned the investment and equipment, which makes sense following on the legislation that you passed. Are we going to see manufacturing jobs come back to the US economy because we don't really see job creation in the goods producing sector yet.
You know it's inching up. But what is going way up is construction. And remember in the Big Beautiful Bill that President Trump did something that was really quite clever where he said for four years, we're going to allow people to expense factories. And so what's happening right now is that people are racing to build the factories, and then once those buildings are up, then they'll put the
machines in and create the jobs and so on. And so construction employment is way way up, and we think that that's like leading indicator for what's going to happen to manufacturing work over the next year or so.
We have seen an optick in government jobs, which I thought was surprising. I figured we were going to go the other way, but we added fifty four thousand there, and an uptick in hiring in a lot of healthcare services, food and accommodations. Those are lower paid areas. Are you worried about the lower half of the K.
Well, what we're seeing is that wages across the board real wages are going up on average about.
Three thousand dollars since President Trump took office. And so you know right now the.
Jobs, the government jobs that you talked about were really state and local jobs, and there tend to be kind of seasonal patterns in those things that aren't.
Completely captured by seasonal adjustment.
And so we have a lot of teachers that took off for the summer and maybe took a job at the boardwalk and so on, that kind of thing, and then it gets offset in September is probably what's going on.
Because it's all local.
We in the federal government have cut federal government employment by more than three hundred thousand workers, and that's like tax savings that is going to accrue to the benefit of the America people.
For a long long time we did.
I was just looking at the wage growth three point four percent and PC was three point eight percent. So how do you factor higher real wages?
You're looking at the latest number and I can send you an email, but we've aggregated it through since when Trump took office, and the UMBER was three thousand as of a speech that we wrote for in a day or two ago.
All right, well, that certainly is good news for the workers in this country. Kevin, great to get some time with you. Really appreciate your joining us. Kevin Hassett is the White House National Economic Council Director, talking to us on a day when the jobs numbers just came in far higher, as he pointed out, than the highest estimate.