Fed's Daly on the Economic Impact of AI, Labor Markets, Monetary Policy

Summary

Mary Daly discusses AI's impact on productivity and labor markets, noting that adoption is still early and aggregate productivity gains are not yet visible. She sees potential for deflationary effects in the long run but emphasizes current inflation driven by tariffs and oil prices. She cautions against extreme views on AI and stresses the need for reskilling and workforce adaptation.

• Daly says AI productivity gains are not yet showing in aggregate data, similar to historical technology adoption lags.
• She notes that AI is currently augmenting rather than replacing workers, with net hiring stable.
• AI infrastructure buildout has not become a major inflation driver.
• Inflation is currently being driven by tariffs and oil prices, not AI.
• Long-term, AI could be deflationary if it leads to sustained productivity growth.
• Daly emphasizes the importance of business process change to unlock AI productivity.
• The Fed is monitoring financial stability but sees value in AI investments.
• She calls for collaborative effort among individuals, firms, and government to prepare workforce.