- US Federal Reserve Chair Jerome Powell expressed concern that the AI wave in the US could cause more job losses than the number of new jobs created.
- He stated that it is impossible to ignore the reality that an increasing number of businesses have cited AI in recent layoff announcements.
- According to Powell, AI could boost growth and productivity “without needing more jobs,” unlike previous technological innovation cycles.
- He emphasized that over the past 200 years, technology has often destroyed some jobs but ultimately created enough new ones, yet this time “might be different.”
- The warning came as the Fed cut interest rates to a 3-year low of 3.75%, down from 4%, due to concerns over rising unemployment and a weakening labor market.
- The decision to cut rates was divisive, with 3 FOMC members voting against Powell’s view.
- Powell suggested that official job numbers are being inflated by about 60,000 jobs per month, meaning the market is actually losing about 20,000 jobs/month.
- Nevertheless, the Fed raised its US GDP growth forecast to 1.7% for this year and 2.3% for 2026, thanks to higher productivity, partly derived from AI advancements.
- Powell noted that the current productivity increase of about 2% per year over the last 5–6 years may come from post-pandemic automation, rather than being entirely due to AI yet.
📌 The Chair of the US Federal Reserve expressed concern that the AI wave in the US could cause more job losses than the number of new jobs created. He emphasized that over the past 200 years, technology has often destroyed some jobs but ultimately created enough new ones, yet this time “might be different.” In the context of the Fed lowering interest rates to 3.75% and forecasting unemployment rising to 4.5%, AI is becoming a new factor altering the balance between growth and labor.
