Kevin Hassett Attributes US Labor Market Slowdown to AI

National Economic Council Director Kevin Hassett stated that artificial intelligence is creating a "quiet time" in the U.S. labor market. Speaking with CNBC, Hassett explained that AI has significantly increased worker productivity, leading employers to reduce the hiring of entry-level workers and recent college graduates.

This assessment follows Bureau of Labor Statistics data showing August nonfarm job growth of only 22,000, alongside an unemployment rate increase to 4.3%. Further evidence of this trend appeared in a Stanford University study, which recorded a nearly 20% decline in the employment of developers aged 22 to 25 by July 2025. Private sector contractions continue, with Amazon and Target eliminating thousands of white-collar roles to remove overlapping work.

Despite these labor market disruptions, the federal government continues to aggressively promote AI development through executive orders and the $500 billion Stargate Project. Hassett maintains that the free market will eventually resolve these shifts as growth in output and income generates new spending opportunities.