Trump Administration Acknowledges AI's Impact On Labor Market Dynamics

The Trump administration’s economic advisor, Kevin Hassett, highlighted the impact of artificial intelligence on the labor market on Monday. According to Hassett, AI is significantly boosting worker productivity, which might prompt companies to slow the hiring of new graduates.

CNBC reported that Hassett expressed concerns on CNBC’s “Squawk Box.” “Firms are finding that AI is making their workers so productive that they don’t necessarily have to hire the new kids out of college and so on.”

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How AI Is Reshaping Labor Market Dynamics

Hassett noted that despite the potential slowdown in hiring, overall economic indicators remain strong. He said that the U.S. gross domestic product grew robustly in the second quarter of 2025. “There could be a little bit of, almost, quiet time in the labor market,” he said, attributing this to AI’s role in enhancing productivity.

However, Hassett emphasized that any slowdown would be short-lived. “Because there’s so much output growth and income growth, that’s the kind of thing that a free market will work out relatively quickly as, you know, new ways to spend money emerge.”

AI Job Concerns Meet A Shift In Economic Messaging

Concerns about AI replacing entry-level jobs have been prevalent, but Hassett’s comments mark a rare acknowledgment from the Trump government. The administration has been a strong advocate for AI development, with President Donald Trump signing executive orders to reduce regulatory barriers and promote AI infrastructure.

As CNBC noted, Hassett’s remarks come amid efforts by Trump and his allies to shift focus towards affordability. Despite Trump’s claims about falling grocery prices, Hassett acknowledged that prices have not decreased during the GOP president’s second term.

Economic Balancing Act Of AI Efficiency

Hassett reiterated that purchasing power has increased, despite persistently high grocery costs. “It’s just kind of astonishing to me that the cost problem is somehow being blamed on us,” he said, defending the administration’s economic policies.

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