AI May Be Creating a “Quiet Period” in the Labor Market, Former Trump Advisor Warns

AI May Be Behind a “Quiet Period” in the Labor Market, Former Trump Economic Chief Says

Artificial intelligence may be reshaping the U.S. labor market in unexpected ways, according to Kevin Hassett, former director of the National Economic Council under President Donald Trump. Speaking on CNBC’s Squawk Box, Hassett suggested that soaring worker productivity driven by AI could be slowing down hiring activity—especially for recent graduates and entry-level workers.

Hassett noted that despite strong economic output — with U.S. GDP expanding solidly in the second quarter of 2025 — employment data has shown “mixed signals.” He believes the discrepancy may be explained by companies discovering that AI-enhanced tools allow existing employees to accomplish far more, reducing the need to expand headcount.

He described the situation as a possible “quiet time” in hiring, emphasizing that this period is not caused by economic weakness but by rapid efficiency gains. Hassett said the imbalance will likely be short-lived, as rising output and income eventually produce new spending, demand, and job creation.

Concerns over AI replacing entry-level roles have been discussed widely, though seldom acknowledged by the Trump administration, which has championed the tech industry and accelerated AI-infrastructure development through multiple executive orders.

Hassett also addressed inflation and affordability — a political battleground in recent elections. While President Trump has argued that grocery prices are falling, Hassett admitted that overall food prices have not actually declined during Trump’s second term. He argued, however, that the dramatic price increases occurred under the previous administration, and that purchasing power has improved recently.

The comments highlight a key tension in the modern economy: AI is boosting productivity at record speed, but labor markets are struggling to adapt, leaving many workers — especially younger ones — caught in a slow transition.