Hassett Highlights AI Productivity, Tariff Revenue, and Energy Boom in Kudlow Interview
NEC Director defends Trump’s economic policies, says growth and disinflation show “momentum can’t be stopped”; teases ag announcement coming
In an interview on Tuesday on Fox Business’ “Kudlow,” National Economic Council Director Kevin Hassett joined host Larry Kudlow to discuss the latest economic trends, the ongoing government shutdown, and President Trump’s trade and energy policies. The conversation offered a window into the administration’s view of falling inflation, surging oil production, and the political gridlock in Washington. And he also signaled that an agriculture announcement is coming.
On Inflation, Growth, and the AI Productivity Boom
Kudlow: “We’ve been talking about deflationary commodities — soybean, wheat, corn, oil, gasoline — all falling. Long bond rates are falling, too. Does that play a role in your thinking on inflation?”
Hassett: “Oh, sure. You were right to focus on the reasons for optimism, and there are so many right now. We’re looking at second- to third-quarter GDP growth averaging almost 4%. The GDP deflator was down to 2.1%. Market consensus sees inflation at around 0.2 to 0.3 percent on Friday, which will allow the Fed to continue along the path of rate reductions.”
Hassett attributed much of the recent disinflation to two factors — Trump’s fiscal tightening and an AI-driven productivity surge: “President Trump’s policies will have raised at least $300 billion in tariffs this year. The Council of Economic Advisers estimates the deficit will be reduced by about $600 billion compared to last year. Academic literature tells us that explains why interest rates are so low.”
“And beyond that,” he added, “the AI productivity boom is totally in the data. When you have a big positive supply shock — like everybody becoming more productive because of AI — that reduces prices, that reduces inflation. We’re seeing that across the board.”
On Energy Prices and Consumer Power
Kudlow noted that average gasoline prices had fallen below $3 per gallon for the first time in more than four years, while U.S. oil output reached 13.6 million barrels per day, crediting the administration’s deregulation drive. “With West Texas Intermediate around $57 and Brent at $60, consumers win while Russia gets hurt. Producing that much oil helps consumers tremendously. That’s progress,” Kudlow said.
Hassett: “You’re right. This is part of President Trump’s energy deregulation and energy domination agenda.”
On the Government Shutdown and Fiscal Authority
Kudlow pressed Hassett on the continuing federal shutdown and reports that OMB Director Russ Vought had been blocked by a California judge from implementing certain spending reductions.
Hassett: “Russ Vought is 100% right on the law. We expect that the ruling will be overturned soon. Once it is, it’ll be time for Democrats to do their constitutional duty and reopen the government.”
He argued that Democrats were “icing the kicker” — trying to slow President Trump’s momentum through obstruction: “Even with the shutdown, we’re not slowing down one bit. Democrats want to stop our momentum, but they can’t do it. It’s almost like they understand how much President Trump has accomplished in the first half of the year and are just trying to slow him down — but they won’t.”
Of note: Hassett also teased an upcoming agricultural policy announcement, hinting at efforts to “cut red tape” and reduce costs for farmers and ranchers to ease food inflation.
On U.S./China Relations and Treasury’s Role
Kudlow closed by asking about Treasury Secretary Scott Bessent’s recent confrontation with a Chinese trade negotiator, which reportedly led to the official’s dismissal by Beijing.
Hassett: “I tip my cap to Secretary Bessent — he’s looking like one of the best Treasury secretaries in American history. He had the wisdom and courage to call out the guy who was rude to Treasury staff, and the Chinese recognized that. That was a very positive development.”
On whether Trump would lift the 100% tariff surcharge following his possible meeting with President Xi Jinping in South Korea, Hassett demurred: “That’s going to be up to President Trump, and so I’m not going to speculate on that one.”
Summary: Throughout the interview, Hassett painted a confident picture of the U.S. economy: strong growth, moderating inflation, booming energy production, and a White House “not slowing down one bit.” His remarks underscored the administration’s central narrative—that tariff revenue, deficit reduction, and productivity gains are jointly reinforcing America’s post-tariff expansion, even amid political gridlock.
