How AI Could Reshape the Economy and the Job Market: Here's Fed Chair Powell's Perspective

Economic Implications of AI - Artificial intelligence is expected to boost the economy, with GDP growth projected at 2.3% for 2026, an increase from the previous estimate of 1.8% [5] - AI infrastructure spending is currently enhancing business investment, which the Federal Reserve is incorporating into its economic forecasts [3][5] - Investment in computer equipment accounted for 92% of GDP growth in the first half of 2025, highlighting the significant impact of AI-related spending [5] Productivity and Labor Market Effects - AI is anticipated to improve productivity, as evidenced by a 3.3% rise in productivity in the second quarter, which can lead to higher wages and corporate profits [6] - However, the adoption of AI may also result in job losses, as it could necessitate workers to seek new employment opportunities [6][8] - The Federal Reserve is monitoring the potential impacts of AI on the labor market, noting that while some companies have cited AI as a reason for layoffs, there has not yet been a significant increase in unemployment claims [10]