Hassett Says Market ‘Terribly Wrong’ to Price Fed Rate Hike

Kevin Hassett argues the strong May jobs report (172k jobs, 4.3% unemployment) is a supply-side success from the 'Big Beautiful Bill', not a precursor to inflation. He dismisses market pricing of a Fed rate hike as 'terribly wrong', citing temporary oil price shocks and historical precedent (1990s Greenspan). He expects oil disruption from Iran to be short-term, with lower risk premiums once nuclear threat is resolved. Construction employment is a leading indicator for future manufacturing jobs.

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National Economic Council 6.2
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Kevin Hassett 7.0

Hassett Says Market ‘Terribly Wrong’ to Price Fed Rate Hike

ndx

Hassett argues the economy is in a supply-side boom with high growth and no runaway inflation, similar to the 1990s. This positive macro outlook, combined with strong corporate investment (equipment up 3%), implies a cautiously optimistic view for growth-oriented tech stocks (NDX) over the medium term.

wti

There is a short term disruption in oil prices, but we expect it to be over soon.

3 calls

-21

consistently off direction or weak follow-through

5/11/2026 6:30:22 PM	short term cautious up	6 days later	+6.34%	+3.17%
4/30/2026 5:19:10 PM	short term sharp up	5 days later	-6.73%	-10.09%
3/17/2026 7:07:05 PM	long term cautious down	61 days later	+12.81%	-6.41%

Show all 3 wti results

Matt

The May jobs report (172k jobs, 4.3% unemployment) is unambiguously good with upward revisions, but inflation at 3.8% PCE raises the risk of broadening inflation.
Kevin Hassett

The strong jobs number is a supply-side response to the 'Big Beautiful Bill' (no tax on tips/overtime, factory expensing), not a sign of inflation. Equipment investment is up 3% in March, and native-born Americans are entering the labor market due to high wage growth.
Matt

Despite positive jobs data, inflation at 3.8% PCE suggests the Fed was right to be cautious, and the market is now pricing in a rate hike. Is that wrong?
Kevin Hassett

Market pricing of a rate hike is 'terribly wrong'. Oil price shocks are temporary and don't lead to lasting inflation. With a supply-side boom, high growth can occur without runaway inflation, similar to the 1990s under Greenspan.
Matt

How soon will the Iran/Gulf situation be wrapped up, given it's largely within US power?
Kevin Hassett

Negotiations are ongoing; the President will decide. Once Iran's nuclear weapon option is removed, global risk premiums will be much lower. There is a short-term disruption in oil prices, but it is expected to be over soon.
Matt

Given the investment in equipment from the legislation, are manufacturing jobs coming back? The goods-producing sector isn't showing job creation yet.
Kevin Hassett

Manufacturing jobs are inching up, but construction employment is way up because people are racing to build factories (due to 4-year expensing). This is a leading indicator for manufacturing jobs over the next year.
Matt

There was an uptick in government jobs (54k) and hiring in lower-paid areas (healthcare, food, accommodations). Are you worried about the lower half of the K?
Kevin Hassett

Real wages are up $3,000 on average since Trump took office. The government jobs increase is state/local seasonal patterns (teachers taking summer jobs), not a trend. Federal employment has been cut by 300k workers, saving taxpayer money.

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