Watch CNBC's full interview with White House National Economic Council Director Kevin Hassett

Speakers

Kevin Hassett — Director, White House National Economic Council

Summary

The US economy is undergoing a massive productivity boom comparable to the 1990s internet era, driven by AI and tax policies.
Corporate profits are expected to skyrocket as companies produce more with fewer workers; software engineering productivity alone is up 50-80%.
Job creation numbers may lag or appear weak due to high productivity and reduced immigration, but this should not be interpreted as a recession signal given 3-4% GDP growth.
The "Government Shutdown" risk is viewed as negligible, with negotiations expected to resolve without closure.

Trade Ideas

Ticker	Direction	Speaker	Thesis	Time
CAT	LONG	Kevin Hassett Director, White House National Economic Council	Caterpillar is highlighted as a top performer in the Dow, and Hassett views this as "100% consistent" with current economic fundamentals. Two forces are driving this: 1) Trump's tax policies allow companies to "expense" (immediately write off) capital equipment, creating high demand for heavy machinery. 2) AI integration is increasing operational efficiency and profit margins for industrial giants like Caterpillar. Hassett notes "big demand for Caterpillar stuff" and cites the stock as the biggest outperformer in the Dow recently. A reversal in tax policy or a slowdown in construction/industrial spending.	2:40
CRM /ENTERPRISE SOFTWARE	LONG	Kevin Hassett Director, White House National Economic Council	Hassett pushes back against the market fear that big software companies (like Salesforce) will be "cannibalized" by raw AI chatbots. While AI is powerful, large enterprises rely on deep, trusted relationships and historical data held by incumbents. Clients will not abandon established platforms for a generic chatbot immediately because the "trust moat" is too wide. Hassett cites conversations with Silicon Valley insiders noting that while productivity is up, the client base is sticky due to "relationships... and data these firms have built over time." Rapid advancement of AI agents that can autonomously replicate complex enterprise software functions.	5:16
US EQUITIES /BROAD MARKET	LONG	Kevin Hassett Director, White House National Economic Council	The economy is in a "productivity boom" similar to the 1990s. AI allows companies to maintain or increase output with fewer employees (lower costs). When productivity rises, profit margins expand. Since profits are the "mother's milk of stocks," this supports a continued rally in equity valuations. Software engineer productivity has increased 50-80% in the last year; GDP growth is tracking at 3-4%. If the labor market contracts too sharply (mass unemployment due to AI) before new roles are created, consumer spending could collapse.	—
US LABOR MARKET	WATCH	Kevin Hassett Director, White House National Economic Council	Upcoming jobs data might look weak (low payroll additions), but investors should not panic or assume a recession. A "break-even" jobs number is now lower than before because 1) AI allows companies to grow GDP without adding headcount, and 2) the labor supply is shrinking due to stricter immigration/deportation policies. GDP is growing at 4% despite "not great" jobs news and higher layoffs (Challenger, Gray & Christmas data). Misinterpreting low job growth as a recession signal could lead to premature selling or policy errors.	—