National Economic Council Director Kevin Hassett said Monday that Americans should brace for a modest reduction in the pace of monthly payroll gains, but he stressed that the trend should not be read as a sign of a weakening economy.
Speaking on CNBC, Hassett linked the anticipated drop in monthly job additions to two structural forces: a slowdown in population growth and a surge in productivity. He argued that as productivity expands, employers may generate the same or higher output without needing to hire at the same clip as before.
"I think that you should expect slightly smaller job numbers that are consistent with high GDP growth right now," Hassett said. "One shouldn't panic if you see a sequence of numbers that are lower than you're used to, because, again, population growth is going down and productivity growth is skyrocketing."
Those remarks came ahead of the January jobs report, scheduled for release Wednesday. The consensus forecast at the time called for 69,000 jobs to have been added and for the unemployment rate to remain at 4.4%.
The January report will also incorporate historical revisions that are expected to reduce payroll totals previously reported for the year through March 2025. Hassett noted that the monthly number of jobs required to keep the unemployment rate stable - which he described as the "breakeven rate" - has moved lower compared with the level observed during the administration of former President Biden.
The observation frames smaller headline job counts in the context of other macro variables instead of treating them as a standalone indicator of labor-market health. In Hassett's view, falling population growth cuts the pool of potential new workers, while rising productivity allows firms to achieve more with fewer hires, together leading to lower net monthly payroll growth even amid continued GDP expansion.
Investors and policy watchers will be watching the upcoming report for both the headline payroll and unemployment figures and for the scope of the historical revisions, which could alter recent perceptions of payroll momentum.