Kevin Hassett argued the strong May jobs report supports a supply-side boom from Trump-era policies, and he rejected the market’s pricing of a Fed rate hike as "terribly wrong." He also said Iran-related risk premiums should fall after nuclear-weapons risk is removed, though oil could see a short-term disruption.
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This Bloomberg interview centers on two linked messages from Kevin Hassett: first, that the May jobs report confirms a strong supply-side expansion in the U.S. economy; second, that the bond and rates market is misreading the inflation consequences and is wrong to price in a Fed rate hike. Hassett frames the labor data as evidence that Trump-era policy is producing a "golden age" boom, with factories being built, equipment investment surging, and wages rising without forcing runaway inflation. On the labor side, Hassett points to what he says are large private investment flows, claiming the president has recruited "$18 trillion of new investment" and that "equipment investment [is] through the roof." He argues that the rise in construction jobs is a leading indicator for future manufacturing hiring because firms are currently racing to build factories before installing machines and …
Tactically, the print is being read through the Fed-hike lens, so rates and front-end expectations may stay volatile until inflation data either confirm or reject Hassett’s "temporary shock" view.
Over the next few months, the trade depends on whether construction and capital spending feed into real manufacturing payrolls while inflation remains contained enough for the Fed to stay cautious rather than hawkish.
The structural thesis is that supply-side policy can raise growth capacity enough to break the old inflation-growth tradeoff; the counter-regime risk is that it proves to be a cyclical burst rather than a durable productivity shift.
The May jobs report shows a strong, unambiguous upside surprise and validates the administration's economic narrative.
Hassett says the economy added far more jobs than expected and ties it to higher investment and a boom.
The current economic expansion is being driven by a supply-side investment boom rather than demand overheating.
He cites recruited investment, equipment spending, and factory construction as the mechanism.
The market is wrong to price in a Fed rate hike after the jobs report.
He explicitly says the pricing is 'terribly wrong' and argues inflation effects from oil shocks are temporary.
Does the strong May jobs number foreshadow the risk of broadening inflation?
Kevin Hassett says absolutely not. He argues the president's policies have recruited $18 trillion of new investment, driving equipment investment and construction, creating a supply-side boom that is a logical response to the Big Beautiful Bill. He says high wage growth is drawing native-born Americans into the labor market.
The market is pricing in a rate hike — is that wrong given inflation at 3.8% PCE?
Hassett says that is terribly wrong. He argues oil price shocks have a temporary impact on core inflation, people see through them, and the Fed should recognize the supply-side boom allows high growth without runaway inflation. He references the 1990s under Alan Greenspan and says absent the Iran oil issue, inflation would be under control.
How soon do you expect the Iran situation to be wrapped up?
Hassett says the president will make the call, negotiations are ongoing, and he is not a forecaster for when it will end. He adds that risk premiums will be much lower once Iran's option to build a nuclear weapon is taken away, and expects short-term oil disruption to be over soon.
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