CNBC's full interview with Trump economic advisor Kevin Hassett on the May jobs report

[00:00:00] Speaker 1: Visions, the year-to-date average, it sure feels to some like the economy's slowing, is it? [00:00:05] Speaker 2: Well, you know, I think that first quarter, let's go to the GDP number first, was in the threes, and the second quarter's looking maybe two-ish. If you go back and look at the two, three percent years that we had in 2017 and 2018, we tended to have, you know, one quarter north of three, and then one quarter in the low twos. And so we're pretty much starting the year out like we started last year out. But the jobs number today was a little bit below our expectation and the market expectation. You know, one thing I haven't seen in the discussion is that there really were pretty serious weather effects. You know, there's all this flooding in the Midwest. I-29 was closed. A lot of the ports had to stop taking traffic. And my professional staff thinks that it took about 40,000 off the number. And so if you add that back in, you know, it's a little bit disappointing, but it's not really caused to change our outlook for the year. Some were thinking that census hiring [00:00:51] Speaker 1: could have added 90K. Do we know where that came in? Yeah. [00:00:56] Speaker 2: Yeah. That my briefing on the census hiring was that there wasn't anything in this number and that that's going to be more apparent in the next few months, especially August. [00:01:06] Speaker 3: Well, first, Kevin Schittman, congratulations on a great run. Oh, thanks. Yeah. And going in the private sector. Look, you know economics well. I think that what we did with China, you know, I just, I've been supporting that the whole way. I do worry that this, in Mexico, there will be U.S. citizens, there will be people who lose their job in Texas and in other states. And would this be the tariff where you have to admit that it may not be so great for Americans, even if there's an imperative, I know with the wall, an imperative with crime. But this could actually make it so that Americans have to pay more and they could lose jobs. [00:01:43] Speaker 2: You know, I think that the real news on that, though, which you guys covered before and I've been briefed on here, is that the talks with the Mexicans have proceeded very favorably and that the president's going to get back to D.C. today from that European trip and look at a bunch of options and weigh all the options over the weekend. And so, you know, I think that the headline on the Mexican talks right now really is that there have been a lot of talks. There's a lot of progress made. I think that people feel like they're going to be presenting the president when he gets back [00:02:10] Speaker 3: with some positive choices. Well, that would be great for them. It could be a reason why the markets are rallying. Kevin, what is great? What does the president really want? And what can, is there a way to create a consensus? I know this is going to sound weird, but a consensus in Congress that this is really important with the Democrats agreeing to. Well, I think that, [00:02:30] Speaker 2: you know, we are still making progress with the USMCA. I think that Speaker Pelosi is open to letting that move forward. And so I do think that there still is a chance to work with Democrats. I know that, you know, when President Obama was in the White House, he was disappointed with his ability to work with Republicans. And we certainly feel it on the other side now. But I have, you know, also this week been briefed on lots of positive progress on the USMCA with Democrats. [00:02:53] Speaker 4: Well, if and when you were asked, sir, by the president, whether or not you favored tariffs on Mexico in an immigration dispute, what did you tell him? [00:03:03] Speaker 2: Well, you know, the president and I have talked about just about everything in that space. And I think that everything has costs and benefits. And right now the president's top priority is to secure the border. And you've got to admit there's a crisis down there that, you know, we could have fixed a long time ago if we could have gotten some political momentum on the hill to do so. And so the president's not going to take no for an answer. He's not going to let the crisis go unaddressed. And he's decided to take this approach. And you've got to admit that the approach has been successful because the Mexicans are in town. They're working with us to try to come to a positive outcome. [00:03:33] Speaker 4: Right. Now, there is some question as to what would be acceptable. Do you feel as though you or the president really have a line and understand what it is that would actually result in no tariffs going into place on [00:03:46] Speaker 2: Monday? Yeah, I think that that's going to be the president's call. But the president has, you know, spent hundreds of hours studying this with really top technical experts. And, you know, there's a lot of material asks on the table. And I think that a lot of progress has been made with those. And the president will weigh that and see if he thinks it's enough. How much have we collected in tariffs so far from China? Do we know? You know, it's a knowable thing. But you didn't ask me before I came out. I'm not going to give you a number that gets fact-checked correctly. But yeah, I mean, our tariff revenues this year are up quite a bit. They are up quite a bit. What are we doing with that money, by the way? It just goes into the general till, so it reduces the deficit. [00:04:27] Speaker 1: I imagine some of it goes to farmers, right, Kevin? Yeah, well, not specifically. I mean, [00:04:32] Speaker 2: that's paid out of general revenues. But for sure, there's been a heck of a lot of relief for farmers who now are even hurting more because of the floods. You know, we've seen pictures of, you know, some farms who are basically completely underwater right now. And so, yeah, there have been billions and billions spent on farm relief. But that's something that doesn't necessarily get directly tied to the tariffs. It comes out of general revenues. [00:04:52] Speaker 1: What do we think the president's reaction will be if the Fed cuts rates in this month or next month [00:04:58] Speaker 2: or in September? Well, you know, my job is to respect the independence of the Fed and not to cheer them on one way or the other. And, you know, you can watch the president's response. I think the president's supporters want to see what he thinks. And I think that's a good thing. And it doesn't mean we don't respect the independence of the Fed. But as CEA chair, for sure, I shouldn't be giving them advice or, you know, saying, hey, if you do this or that, then, you know, I'll dance a jig or [00:05:19] Speaker 3: something. Thank you. Thank you. How close do you think the Chinese are to rolling over? I mean, to me, their economy has really been hurt by this. I think it's been working. It's very clear their tech stocks are down 20 percent. I know they talk a big game. We keep hearing about the 200 year plan. But isn't isn't China very weak right now? And could they be just having have to make a deal in order to get their economy restarted? Well, for sure, this has had a big, much bigger [00:05:46] Speaker 2: impact on them than us. And that's partly by the design of the tariffs that we put in place. You know, I think that we're hopeful that at G20, we can get back to where we were, which was very close to a deal. I think the thing to remember is that, you know, while the deal hit a roadblock right before the roadblock, I think a lot of us to the White House thought that we were very close to having a final deal. So getting from where we are now, which is not much talking to close to a deal isn't as big a trick as you might think, because so much work has been put into getting close to a [00:06:15] Speaker 4: deal. Yeah. Kevin, thanks for sticking with us with this very loud noise here with the big IPO at the exchange today. I thought they were cheering me, right? Well, yeah, you can take it that way. Why not? Yeah, sure. If I get back to the U.S. economy for a moment, I mean, you mentioned, of course, 3.2 percent, fourth quarter GDP, you know, the GDP number. We had a very strong employment number out of that, but we've averaged 150 over the last three months. That's correct. Business investment, there's some concern about that. There's even some concern about consumer, you know, depending on who you talk to in the retail industry. Are you concerned that there is something going on here in terms of a slowdown in the U.S. economy, whether it starts with business investment or even kicks [00:06:55] Speaker 2: over to a more concerned consumer? Right. Well, for sure, there's a global slowdown going on. And that's something that's been remarked upon by the IMF and the World Bank. But in the U.S., the thing that I've held on to as I've refused to revise my forecast throughout the year, watching, you know, a month or two of bad data, is that income growth is still really strong. You know, we have wage growth north of three for 10 months in a row, first time since 2009. And when you get income growth like that, you tend to get lots of consumption growth. And that's kind of an insurance policy against bad GDP. So I think that, you know, we had a really strong first quarter. The first quarter is usually weak. If you look at the income growth that tends to kind of move like the Queen Mary, it's something that should be a kind of insurance policy against getting down below two for the year. And so I think that three is still a pretty good sweet spot, given how strong the first quarter was and the fact that the first quarter is [00:07:42] Speaker 1: usually weaker. Kevin, we're going to let you go. Okay, great to see you again. [00:07:46] Speaker 2: Thanks. Great to see you guys. Yeah, thanks. Oh, I'll be here probably for about a month.