It may not happen today or even tomorrow, but US Federal Reserve Chair Jerome Powell is confident that AI will soon significantly transform the US economy and labor market.
Speaking to the US Senate Banking Committee on Wednesday as part of his semiannual monetary policy report, Powell told elected officials that AI’s impact on the economy so far has been limited, but it holds “enormous capabilities to make really significant changes in the economy and labor force.”
Powell declined to predict how quickly this transformation might occur, noting only that the final steps from a promising new technology to widespread practical use can be slow. “What’s happened before with technology is that it seems to take a long time to be implemented,” Powell said. “That last phase has tended to take longer than people expect.”
Powell asserted that AI is likely to follow this historical trend, though he acknowledged uncertainty about the timeline for when artificial intelligence might reach its economy-transforming maturity. “There’s tremendous uncertainty about the timing of [economic changes], what the ultimate consequences will be, and what the medium-term consequences will be,” he added.
Powell’s view that AI has not yet caused major disruptions in the labor market was supported by recent studies showing that the technology has not yet replaced jobs or suppressed wages. However, there are signs that AI’s influence, while still gradual, is beginning to accelerate.
In 2023, UK telecom giant BT announced plans to reduce 42 percent of its workforce—approximately 55,000 employees—by 2030, and recently suggested that AI could lead to even deeper cuts. Meanwhile, Anthropic CEO Dario Amodei expressed concerns that AI could soon affect entry-level white-collar jobs, potentially eliminating up to half of those roles within five years and impacting as much as 20 percent of the broader labor force.
Currently, only 4 percent of jobs rely heavily on AI, with the highest usage seen in mid-wage roles.
Salesforce CEO Marc Benioff stated in a Thursday interview on Bloomberg’s The Circuit that AI is already performing “30 to 50 percent of the work at Salesforce now,” and he expects ongoing workforce reductions as the company transitions to an AI-driven operation. “We’re looking at productivity gains of 30 to 50 percent this year in key functions like engineering, coding, and support,” Benioff said. “I think that will continue.”
Powell told Senators that the Fed will be monitoring these developments, but emphasized that the central bank lacks the tools to address the resulting social and labor market challenges. “We just have interest rates,” he said—implying that it would be up to others to take action to mitigate the potential economic fallout from AI.
— news from (theregister.com)
— News Original —
Fed chair Powell says AI is coming for your job
It may not happen today or even tomorrow, but US Federal Reserve chair Jerome Powell is confident that someday soon AI is going to seriously change the US economy and labor market.
Speaking to the US Senate Banking Committee on Wednesday to give his semiannual monetary policy report, Powell told elected officials that AI ‘s effect on the economy to date is “probably not great” yet, but it has “enormous capabilities to make really significant changes in the economy and labor force.”
Powell declined to predict how quickly that change could happen, only noting that the final few leaps to get from a shiny new technology to practical implementation can be a slow one.
“What ‘s happened before with technology is that it seems to take a long time to be implemented,” Powell said. “That last phase has tended to take longer than people expect.”
AI is likely to follow that trend, Powell asserted, but he has no idea what sort of timeline that puts on the eventual economy-transforming maturation point of artificial intelligence.
“There ‘s a tremendous uncertainty about the timing of [economic changes], what the ultimate consequences will be and what the medium term consequences will be,” Powell said.
Powell ‘s belief that AI isn ‘t yet causing massive changes to the labor market has been shown in a recent study that found the technology isn ‘t yet replacing jobs or depressing wages. But there ‘s also evidence to suggest whatever trickle effect AI may be having is beginning to gain speed.
UK telecom giant BT announced plans in 2023 to cut 42 percent of its workforce (around 55,000 people) by 2030, and said last week that AI might enable even greater reductions. Anthropic CEO Dario Amodei, meanwhile, expressed concern that AI might be coming for entry-level white collar workers, eliminating as many as half of those positions in the next five years and as much as 20 percent of the broader labor force.
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Salesforce CEO Marc Benioff said in a Thursday interview on Bloomberg ‘s The Circuit that AI is already doing “30 to 50 percent of the work at Salesforce now,” and that he expects workforce cuts to be ongoing as he turns his operation into one powered by AI agents.
“We ‘re looking at productivity levels of 30 to 50 percent this year in key functions like engineering, coding [and] support,” Benioff said. “I think that will continue.”
That continuation will be watched by the Fed, Powell told Senators, but that doesn ‘t mean he ‘ll have the power to do anything about it.
“The Fed doesn ‘t have the tools to address the social issues and the labor market issues that will arise from this,” Powell said. “We just have interest rates.”
In other words, someone else is going to have to actually act to prevent the worst of the potential economic AI fallout, Senators. ®