Kevin Hassett Calls for Reform and Reevaluation of Federal Reserve Independence

Kevin Hassett, former Chairman of the White House Council of Economic Advisers (CEA) and current member of the National Economic Council (NEC), has raised critical concerns about the Federal Reserve’s independence and credibility, arguing that its foundational principles may be under threat. Calling for a comprehensive bipartisan review, Hassett believes the Fed’s role in regulation, monetary policy, and research demands urgent reassessment to better align with modern economic realities.

Evaluating the Federal Reserve’s Transparency and Independence

During an appearance on CBS’s Face the Nation on October 7, Hassett questioned the Federal Reserve’s transparency and independence. “There’s obviously some debate about whether the Fed has been as independent and transparent as we’d like,” he commented. His remarks follow years of engagement as a senior advisor in the Trump administration, where he played a critical role in dissecting economic policy. He cautioned that the Fed may be venturing in a dangerous direction, jeopardizing the balance between autonomy and accountability required for sound monetary governance.

Hassett’s sentiments echoed those of Treasury Secretary Vincent Bessent, who recently criticized the Fed in The Wall Street Journal for “mission overreach.” Hassett supported Bessent’s call for reevaluating the Fed’s objectives and practices, suggesting that the institution could benefit from greater focus and clarity in its operational priorities.

Concerns Over Employment Data Accuracy and Inflation Management

Hassett took a stern position on issues plaguing U.S. labor market statistics, emphasizing their unreliability and the need for modernization. He pointed out massive revisions in employment data—the largest in 50 years—highlighting discrepancies that undermine economic policy decision-making. For example, non-farm payroll data from August showed only 22,000 new jobs, whereas household surveys documented 288,000. Such glaring inconsistencies, according to Hassett, signal systemic flaws in government data collection methods.

“Two sets of statistics should point to the same answer,” Hassett argued, underscoring the inefficiencies and inaccuracies of current labor-reporting practices. He also referenced private-sector data from organizations like Homebase, which reported 150,000 new jobs in August—figures starkly at odds with government estimates. Furthermore, Hassett noted last year’s benchmark revisions to employment statistics, which resulted in over 1 million job changes, as a striking example of methodological inadequacies. He called for closer scrutiny to ensure labor data integrity.

On inflation, Hassett observed a significant decline—from over 3% when Trump assumed office to a six-month average of 1.9%. He attributed this downward trend to the Federal Reserve’s policy interventions, particularly the anticipated trio of rate cuts aimed at tempering inflationary pressures. Hassett emphasized the importance of inflation control but questioned whether the Fed’s current models will suffice in the long-term.

Addressing Political Bias and Federal Reserve Overreach

Hassett broached the sensitive issue of political bias in economic data, suggesting that patterns may reflect unintended political leanings. “There seems to be patterns of political tendencies in data,” he stated, urging reforms that would modernize survey methodologies and enhance transparency in statistical reporting. Specifically, he championed upgrades to the Bureau of Labor Statistics (BLS) systems, which he believes have fallen behind private-sector capabilities.

One particular trend Hassett highlighted was the geographic disparity in unemployment claims, noting that blue states—traditionally Democratic strongholds—accounted for 80% of new claims. This uneven distribution raises deeper economic and policy questions about regional employment patterns and systemic biases in labor statistics. Despite these disparities, Hassett acknowledged a modest yearly increase of roughly 500,000 private-sector jobs, illustrating a cautiously optimistic outlook alongside a call for improved data accuracy.

When pressed on public opinion polls favoring the Fed’s independence, Hassett stressed that the central bank should remain insulated from political interference. He warned of the dangers posed by political control of monetary policy, stating, “When politicians run central banks, the result is inflation and consumer suffering.” He reiterated the critical importance of safeguarding the Federal Reserve’s autonomy to maintain stable economic governance.

Prospects for Federal Reserve Reform

Although Hassett acknowledged ongoing discussions with President Trump regarding monetary policy, he emphasized that no concrete plans for Federal Reserve reform currently exist. However, his remarks suggest an active dialogue about the institution’s role and future direction. Dismissing speculation about his appointment as Federal Reserve Chair as “purely hypothetical,” Hassett remained focused on broader efforts to reshape debates surrounding the central bank.

As a prominent voice in economic policy and reform, Hassett’s critiques of the Fed's independence, labor statistics, and inflation management suggest he could play a major role in influencing future discussions about modernizing the Federal Reserve. With bipartisan calls for transparency and clarity growing louder, Hassett’s insights will likely be pivotal in shaping the next chapter of U.S. monetary policy governance.