On Monday’s broadcast of CNBC’s “Squawk Box,” White House National Economic Council Director Kevin Hassett said that he believes economic uncertainty will be fully resolved in April, and uncertainty around tariffs “is actually creating jobs in the U.S.”
Hassett said, “Near-term, we’ve got a Biden economy that, still most of the Biden policies are in place. if you look at the Atlanta Fed GDP now number, it’s showing negative first quarter, which is kind of, if you like, a metric of the inheritance of President Biden. A lot of that is also from a big increase in the trade deficit, which, as you know, and you’ve been covering, Joe, is happening, in part, because people are anxious about future tariffs and so they’re stockpiling. And so, that’s a very, very temporary phenomenon. I think that, medium-term, what you’re seeing is the biggest tax cuts in history, a massive deregulation, a productivity boom from artificial intelligence, and tariffs, which even if you take the high-end estimates of the tariff revenue, they’re going to be just a tiny fraction of the size of the tax cuts, which are almost surely going to be in place by the summer. So, if you’re thinking about, like, what’s going to happen to capital formation in the U.S., if you take our cost of capital measures, it goes up 10, 11% over the next year. There are a lot of reasons to be extremely bullish about the economy going forward. But, for sure, this quarter, there are some blips in the data, including the negative GDP now, which are related, both to the Biden inheritance and to some timing effects that are happening ahead of tariffs.”
He added that there often is post-election uncertainty, which “usually gets resolved around March,” and “what I’m seeing in the jobs number, for example, is that the uncertainty is actually creating jobs in the U.S. Right now, we just saw 10,000 manufacturing jobs created in the U.S., 9,000 auto jobs. … And so, what’s going on with the trade policy, which is a small fraction of the overall policy, is that it’s starting to have the intended effect of onshoring activity in the U.S.”
Hassett further stated, “I think there are some things that, already, you’re seeing are moving in exactly the right direction. So, if you look at what’s happened to the ten-year rate, I think that all the spending [cuts] that we put into our reconciliation package, plus, the DOGE spending cuts are going to be on top of that, that’s put a lot of downward pressure on interest rates. That’s making it easier to buy a car, easier to buy a house. That kind of stuff is being resolved already. I think that the idea about when or how much do people have to move stuff from this country to that country, that’s the stuff that I expect will be resolved and visible in April. But the uncertainty over that is already visible in the numbers. That’s what I’m saying. So, imagine we made 9,000 auto jobs in February, even though there aren’t any auto tariffs — new auto tariffs in yet. That’s because people are onshoring production, which bids up the wage and makes the welfare of Americans better, just as President Trump said.”
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