White House economic adviser Kevin Hassett is now all but certain to replace Jerome Powell as Federal Reserve chairman in 2026, according to prediction markets. Once a mainstream Republican economist, Hassett has become a loyal defender of Donald Trump, echoing calls for aggressive rate cuts and publicly accusing Powell – a fellow Republican – of acting for political ends, claiming he cut rates “ahead of the election to help Kamala Harris”.
Hassett even defended Trump’s alarming firing of the Bureau of Labor Statistics commissioner over a weak jobs report, saying the US government is packed with “people who have been resisting Trump everywhere they can”, underscoring his willingness to defend the politicisation of independent government agencies.
While respected economists across the political spectrum once defended Hassett’s expertise, partisanship and poor judgment are hardly new.
In 1999, just before the dotcom crash, he co-authored Dow 36,000, claiming stock prices could nearly quadruple. Days before stocks bottomed in the 2008-2009 crash, he blamed the newly-inaugurated President Obama for market declines, framing the collapse as a “war on business”.
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In 2017, he defended wildly optimistic projections for corporate tax cuts. At the start of the pandemic in 2020, he built an infamous model indicating Covid-19 deaths would peak in mid-April before plunging to near zero within weeks.
These episodes suggest a consistent pattern: Hassett may be technically competent (he has a PhD in economics), but he appears ready to prioritise loyalty and convenience over caution. As the Economist put it more bluntly, he has behaved under Trump “like a party hack wholly unconcerned with reality”.
According to the Financial Times, bond investors are already worried, telling US treasury advisers they fear he would be too aggressive in cutting rates to please Trump, even with inflation above the Fed’s 2 per cent target.
Of course, Hassett would still be only one vote on the Fed’s rate-setting committee, leaving open the possibility that a divided board could rein in any extreme moves. Still, the chairman’s influence extends beyond a single vote. Hassett’s elevation could signal a dangerous tilt toward politically-driven policy.
