It may not happen today or tomorrow, but US Federal Reserve Chairman Jerome Powell is confident that one day AI will seriously change the US economy and labor market.
To file a six-monthly monetary policy report to the U.S. Senate Banking Committee on Wednesday, Powell told elected officials that while the impact of AI on the economy to date has not yet been “probably great,” he said, “there is a huge capacity to really make a big difference in the economy and the workforce.”
Powell refused to predict how quickly the change would happen, but noted that the last few leaps from shiny new technology to practical implementations could be slow.
“What happened previously with technology is that it appears to take a long time to implement,” Powell said. “That last stage tended to take longer than people expected.”
Powell argued that AI is likely to follow that trend, but he doesn't know what timeline to put at the maturity point of artificial intelligence's final economic transformation.
“There is a great deal of uncertainty about timing. [economic changes]what is the ultimate outcome and what will happen in the medium term,” Powell said.
Powell's belief that AI has not yet caused major changes to the labor market is shown in recent research that finds that the technology still replaces jobs and does not settle wages. However, there is also evidence that the trickle effects that AI may have are beginning to speed up.
British telecom giant BT announced plans in 2023 to cut 42% of its workforce (approximately 55,000 people) by 2030, saying last week that AI could potentially allow for further reductions. Meanwhile, humanity CEO Dario Amody has expressed concern that AI could come to entry-level white-collar workers, eliminating half of these positions over the next five years and 20% of the broader workforce.
Salesforce CEO Marc Benioff said in an interview Thursday about Bloomberg's The Circuit that AI is already doing “30-50% of my job at Salesforce.”
“We are considering a productivity level of 30-50% this year with key features such as engineering, coding and more. [and] “Support,” Benioff said. “I think that's going to continue.”
That continuation will be monitored by the Fed, Powell told the senators, but that doesn't mean he has the power to do anything about it.
“The Fed doesn't have the tools to address social issues and the labor market issues that will arise,” Powell said. “There's just interest rates.”
In other words, someone else will have to act to prevent the actual potential economic AI fallout, Senator. ®
