Fed Governor Lisa Cook says she’s certain that AI will create new jobs, but not before employees witness the pain of the economic transition.
In a speech at the 42nd Annual NABE Economic Policy Conference, Cook says AI is boosting productivity growth by speeding up the creation of ideas.
According to the Fed governor, people and enterprises are now using the technology to develop new products and services.
“People are using AI in varied and interesting ways, including writing romance novels more quickly, dreaming up new recipes, and even deciding marital disputes. I am thrilled to see firms experimenting with AI in novel, creative ways… By making powerful analytical tools available to everyone, not just experts, AI democratizes innovation: it allows more people to become inventors, innovators, and entrepreneurs, creating a cycle of self-generating ideas where ideas generate more ideas.”
But in the long run, Cook says she’s “appropriately cautious” about AI’s impact on society, particularly in the labor market. She notes that while AI holds tremendous promise, there will be a transitional period when white-collar workers and their families get hit before the emergence of new job opportunities.
“We appear to be approaching the most significant reorganization of work in generations. This transition could create new opportunities, but it could also come with some costs. In a recent speech, I discussed the possibility that job displacement may precede job creation, such that the unemployment rate may rise and participation in the labor force may decline as the economy transitions. This outcome could cause hardship for many workers and their families.
Evidence that the transition has commenced has emerged, even if it is too soon to see the effects in the aggregate. Demand for labor in certain occupations has declined—most notably for coders, a field where AI has made significant strides. Similarly, the unemployment rate for recent college grads has increased over the last few years at a time when some employers are deploying AI for what had been tasks previously performed by entry-level workers.”
For now, Cook says the labor market looks stable with the US unemployment rate hovering at 4.4%. She also says the exact evolution of the AI-driven labor market transition or its intensity remains unknown at this stage.
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.