AI-Summary – News For Tomorrow
Federal Reserve officials are considering AI’s potential impact on worker productivity when forecasting economic conditions. Research suggests AI, especially content-generating tools, could significantly alter worker output and the job market. Economists have modeled various scenarios, acknowledging AI’s possible effects on the Fed’s goals of full employment and price stability. While AI could boost productivity, potentially lowering inflation, it may also create new jobs and raise specific costs due to demand for skilled workers and data centers. Fed officials emphasize the difficulty in predicting AI’s precise influence on jobs and prices, comparing it to transformative innovations like the printing press.
News summary provided by Gemini AI.
Top officials at the Federal Reserve are now taking into account how artificial intelligence might boost worker output as they map out future economic conditions, a shift that could reshape how the central bank approaches interest rates and employment targets.
Research suggests these new AI tools, especially those that generate content, could significantly change both how much workers produce and the makeup of the job market itself. Two economists studying this issue created different models to see what might happen. Ping Wang from Washington University in St. Louis and Tsz-Nga Wong from the Richmond Federal Reserve Bank mapped out several possibilities.
Dramatic productivity scenarios take shape
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These changes could affect how the Fed pursues its two main goals: keeping people employed and preventing prices from rising too fast. In December, the committee that sets interest rates predicted the benchmark rate would settle around 3 percent in the long term. Economists at the Cleveland Fed said this would be somewhat loose compared to a neutral rate of 3.7 percent.
Data center investment boom draws comparisons to 1990s
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AI could match historic innovations
Jefferson said AI might prove as transformative as the printing press, steam engine, or internet. But he cautioned that figuring out AI’s effect on jobs and prices remains difficult. While the technology could replace some workers, it might also create new job types and boost overall economic growth.
On prices, Jefferson said increased productivity could lower costs and reduce inflation. But AI could also push certain prices higher as companies compete for skilled workers and build energy-hungry data centers.
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