Strong US jobs growth did not necessarily justify higher interest rates because increased production could limit inflation, White House National Economic Council director Kevin Hassett said in a Nov. 6 interview.
Hassett defended the administration's economic policies despite voters' frustration with prices, offering no change in direction during the Bloomberg Television interview. He said inflation was falling but acknowledged that households still faced rising costs.
He described a strong week for employment, citing falling unemployment insurance claims, plentiful job openings and an increase in workers quitting. He said the latest jobs report exceeded expectations by more than double and included large upward revisions to earlier months.
Hassett argued that growth driven by greater production capacity need not increase inflation in the way stronger demand could. Tax provisions allowing businesses to deduct capital equipment costs helped expand supply, he said, citing 120,000 people building new factories without identifying the issuing statistical agency.
Asked whether he had told President Donald Trump to abandon hopes of interest rate cuts, Hassett said they had not discussed cuts during nearly 45 minutes together the previous evening. He said Trump could veto attempts by Democrats to repeal administration policies and could use executive powers to pursue deregulation.
Hassett rejected the need to change economic policy after the election. "I think that the policies are working," he said, arguing that measures to increase production supported growth and job creation while limiting price increases.
He blamed spending under former President Joe Biden for inflation and put the cumulative price increase during Biden's presidency at about 22%, without identifying a statistical source. He used a hypothetical 3% inflation rate to explain why slower increases still leave prices rising.
Hassett attributed current inflation partly to higher energy prices linked to the situation in Iran. He said underlying inflation, which excludes food and energy, had returned to around the Federal Reserve's target over the three months before the latest consumer price release.
Pressed on tariffs and the Iran war, Hassett offered no policy change. He said higher energy costs spread through other prices, including airfares, while administration policies worked to reduce inflation. He said egg prices had fallen sharply and beef prices had declined in four of the past five months, without identifying the source of those figures.
Hassett also said the election had not changed the timetable for a White House review involving Federal Reserve Governor Lisa Cook. The White House counsel's team was arranging a meeting with Cook and her representatives to review evidence before preparing a report for Trump.
He rejected the suggestion that the outcome was predetermined and said he could disagree with others involved in the review. "I would not have agreed to do this" without confidence that he could follow his conscience and dissent, he said.
Hassett did not say whether Trump would accept a recommendation to retain Cook. "He'll read the report," he said, adding that the president would decide the next step. He gave no date for the meeting or completion of the review.
