U.S. Treasury Secretary Scott Bessent said Friday he is optimistic the labor market will emerge from its present low-hire, low-fire state, citing indicators that suggest firmer labor demand may be on the horizon.
Speaking at the Economic Club of Dallas, Bessent emphasized the impact of recent corporate capital expenditures. He noted that business investment in AI data centers climbed sharply last year and linked that surge to potential employment gains. "Traditionally capex booms were followed by labor booms," he said, drawing a direct connection between elevated capital spending and subsequent increases in hiring.
Bessent flagged activity in temporary staffing as another early signal. He said temp agencies are reporting stronger profits and "very good demand," adding that, in his view, such patterns tend to evolve into more sustained hiring. "Historically that morphs into long-term demand," he said.
The Treasury Secretary also addressed recent legal developments and credit-sector dynamics. He said he was a little surprised by a Supreme Court ruling and warned that a dispute over refunds could be protracted, potentially stretching out for "weeks, months or years."
On private credit, Bessent set out the government's priority for the regulated finance system. He said the government's role is to ensure that problems originating in private credit do not spill over into the regulated system. He noted that, to date, private credit has been "additive to the economy."
Context and implications
Bessent framed the comments around observable market signals—corporate capex, temporary-staffing strength and the behavior of private credit—while flagging potential legal uncertainty tied to a Supreme Court decision. His remarks framed these developments as possible precursors to a more active labor market, without asserting a definitive timeline.
Key takeaways
- Rising business investment in AI data centers is viewed by the Treasury as a potential driver of future hiring.
- Improving profits and demand at temp agencies are taken as early signs that short-term hiring could translate into longer-term labor demand.
- Officials are monitoring private credit to prevent contagion into the regulated financial system; so far, private credit has been supportive of economic activity.