- Key insight: Fed Gov. Cook said artificial intelligence may already be influencing employment trends, pointing to lower demand for computer engineers as one potential sign of change.
- Expert quote: "It is very difficult to measure labor productivity and total factor productivity. So we should be patient and we should be nimble in thinking about the rollout of AI." — Federal Reserve Gov. Lisa Cook
- Look ahead: If AI boosts productivity, economic growth could remain strong even if unemployment rises, complicating the central bank's efforts to balance its dual mandate of maximum employment and stable prices.
Federal Reserve Gov. Lisa Cook said Tuesday that the impact of generative artificial intelligence could take years, but signs are emerging such as lower demand for computer engineers.
Speaking during a panel at the National Association for Business Economics conference in Washington, Cook said it may take five to 10 years for AI-related productivity gains to be meaningfully quantified and reflected in the data.
"It is very difficult to measure labor productivity and total factor productivity," Cook said during the panel. "So we should be patient, and we should be nimble and thinking about the rollout of AI."
Still, early signs suggest AI is beginning to reshape the workplace. Cook said demand for workers in computer engineering fields is declining.
"Demand for labor in certain occupations has declined—most notably for coders, a field where AI has made significant strides," she said in prepared remarks before the panel. "Similarly, the unemployment rate for recent college grads has increased over the last few years at a time when some employers are deploying AI for tasks previously performed by entry-level workers."
Cook said it remains difficult to determine whether artificial intelligence is directly contributing to unemployment, particularly among younger workers entering the labor force. She said the central bank is "very carefully" monitoring whether AI adoption is affecting employment trends.
"Labor force participation is declining, but this is something to be watched," she said.
The Fed official expressed caution about AI's long-term effect on the workforce. While new jobs are likely to emerge, she said, the transition could come "with some costs."
"The unemployment rate may rise and participation in the labor force may decline as the economy transitions," she said. "This outcome could cause hardship for many workers and their families." Looking ahead, Cook said that if AI boosts productivity, economic growth could remain strong even if unemployment rises.
"In a productivity boom such as this, a rise in unemployment may not indicate increased slack," she said. "As such, our normal demand-side monetary policy may not be able to ameliorate an AI-caused unemployment spell without also increasing inflationary pressure."
As a result,
"While there is a role for monetary policy, education, workforce, and other policies that is nonmonetary may be better suited to address these challenges in a more targeted way," Cook added.
Other Fed officials, including Gov. Michael Barr and
"We are closer to the first scenario," he said. "That is, AI contributes, over time, to higher productivity, it becomes an important general purpose technology, it contributes to research and development in a way that helps us build new things, maybe helps us provide energy more efficiently, cures disease faster — things that we all love — and it will help improve our lives, but doesn't radically transform our labor market and doesn't move as speed that makes it impossible to adjust."
