White House National Economic Council (NEC) Director Kevin Hassett said the latest US jobs report came in broadly in line with expectations and that the data point to a very strong American consumer. Hassett laid out the administration's economic outlook in an interview on Bloomberg TV. The NEC is the White House office that coordinates economic policy for the president; Hassett previously chaired the Council of Economic Advisers during Trump's first administration.

He said he expects a strong holiday shopping season, with the consumer strength reflected in the jobs data carrying into the year-end spending period. That outlook carries weight because consumer spending is the largest component of US economic activity, which is why year-end demand is closely watched as a gauge of the economy's momentum. The monthly employment report, produced by the Bureau of Labor Statistics, tracks hiring and unemployment across the US economy and is among the most closely watched indicators of its health.

On monetary policy, Hassett said the administration respects the independence of the Federal Reserve, the US central bank that sets the interest rate policy influencing everything from mortgage rates to asset prices. He described the situation between Fed Chair Warsh and Powell as unusual.

Turning to bond markets, Hassett attributed higher bond yields to the strength of the economy. At the same time, he called the government's current interest payments unacceptably high and said President Trump is committed to reducing the deficit, the gap between federal spending and revenue. He added that the administration does not want to use inflation to reduce the real value of its debt. Higher yields raise federal borrowing costs, since the Treasury must roll over maturing debt at prevailing market rates, and they feed into borrowing costs across the broader economy.

According to the analysis accompanying the report, Hassett's message was upbeat: the White House sees consumers continuing to spend and expects that strength to carry into the holiday season, while presenting higher yields as a reflection of a strong economy. The challenge, the analysis noted, is that higher yields also make the government's debt more expensive to finance. Reducing the deficit would help address that burden, but traders will want to see the policies behind the promise. For the economy, the key question is whether consumer spending can remain strong if job creation stays subdued and yields move higher.

This article is based on reporting published at investinglive.com.