Here's something you don't hear from the White House every day: artificial intelligence might actually be keeping new college graduates out of jobs. Kevin Hassett, economic advisor to the Trump administration, made the admission Monday in surprisingly candid terms.
Speaking on CNBC's "Squawk Box," Hassett explained the dynamic that's emerging across corporate America. "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."
The Productivity Paradox Hits the Labor Market
It's an interesting acknowledgment from an administration that's been pushing AI development hard. Hassett tried to soften the blow by pointing to robust economic indicators, noting that U.S. gross domestic product grew strongly in the second quarter of 2025. His view? We might see "a little bit of, almost, quiet time in the labor market" as AI reshapes how companies think about staffing.
But don't panic about a permanent shift, Hassett suggested. The economic advisor emphasized that any slowdown should be temporary. "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."
Rare Admission From an AI-Friendly Administration
The comments are notable because concerns about AI displacing entry-level workers have been circulating for months, yet this marks one of the first times the Trump government has directly acknowledged the trend. President Donald Trump has signed executive orders specifically designed to reduce regulatory barriers and promote AI infrastructure development.
Hassett's remarks also came during a broader effort by Trump and his allies to pivot the economic conversation toward affordability issues. Despite the president's claims about falling grocery prices, Hassett conceded that prices haven't actually decreased during Trump's second term.
Defending the Economic Record
Instead, Hassett argued that purchasing power has increased even as grocery costs remain stubbornly high. "It's just kind of astonishing to me that the cost problem is somehow being blamed on us," he said, pushing back against critics of the administration's economic policies.
The broader picture emerging from Hassett's comments: AI is delivering real productivity gains that show up in GDP numbers, but those same gains are creating immediate friction in the labor market, particularly for workers just entering the workforce. Whether the free market adjusts as quickly as Hassett predicts remains an open question.
