Fed’s Daly says she does not see mass unemployment or displacement from AI

• I don’t see mass unemployment or displacement from AI
• Barriers to getting sustained productivity growth from AI are largely regulatory
• I see green shoots for productivity growth from AI
• There’s a lot of promise in AI
• I’m cautiously optimistic about the economy
• Policy is in a good place
• It’s important for the Fed to restore price stability, but not at the expense of harming the economy
• Productivity growth is an important way for growth to expand, allowing companies to hire more workers

Fed’s Daly expressed optimism about the economic potential of AI, arguing that the technology is more likely to drive productivity gains and support growth rather than trigger widespread job losses.

Daly said she does not currently see evidence that the technology will cause mass unemployment or large-scale worker displacement, pushing back against some of the more pessimistic forecasts surrounding rapid advances in automation.

Instead, Daly pointed to what she described as early signs that artificial intelligence is beginning to improve efficiency across sectors of the economy. While the full effects remain uncertain, she said there are already “green shoots” suggesting AI could contribute to stronger productivity growth in the years ahead.

Productivity growth has long been viewed by economists as one of the most important drivers of sustainable increases in living standards and economic output. Higher productivity allows businesses to produce more with the same resources, supporting wage growth, profits, and employment without necessarily generating inflationary pressures.

She argued that AI holds considerable promise in this regard, describing the technology as a potentially transformative force for the economy. However, she suggested that the greatest obstacles to achieving sustained productivity gains may not be technological but regulatory.

Optimists argue that AI could unleash a new wave of productivity growth similar to previous technological revolutions, while critics warn that adoption challenges, workforce disruptions, and regulatory hurdles could slow its impact.

Beyond her comments on AI, Daly offered a generally constructive assessment of the broader economic outlook. She said she remains cautiously optimistic about the US economy, citing ongoing resilience despite uncertainty surrounding inflation, interest rates, and global developments.

On monetary policy, Daly indicated that she believes the Federal Reserve is currently well positioned. She described policy as being in a good place and reiterated the central bank’s commitment to restoring price stability while avoiding unnecessary damage to economic activity.