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Fed's Cook says AI triggering big changes, sees possible unemployment rise
- lelandbatey 8mo ago> "Monetary policymakers would face tradeoffs between unemployment and inflation. ... Education, workforce, and other policy that is non-monetary may be better suited to address these challenges in a more targeted way." How comforting. Sounds to me like "ZIRP won't fix this one folks, it's gonna take something other than money to fix what's coming."
- lysace 8mo agoThe only question is how ugly it's going to get. Globally. The closest thing we've seen in terms of scope/velocity is probably the introduction of the web in the late 90s to the broader world. Very few jobs were killed by that, though, relatively speaking.
- cactusplant7374 8mo agoThis whole thing stinks.
- bubblewand 8mo agoThe global effect at my company is that we fired a bunch in the US, hired a bunch in India, and are probably gonna do the same again in a year or so, if I'm reading the tea leaves right. We're heavily pushing "AI" but we're not cutting headcount, just shifting them overseas.
- janalsncm 8mo agoThe closest thing is probably workers displaced by machines in the Industrial Revolution. Some people took it into their own hands to smash machines, and it didn’t go well for them. Today we use Luddite as an epithet, but they were right about the effect of automation on their jobs.
- rchaud 8mo agoThat would apply to robotics automation in factories and warehouses would it not? From what I can tell, all the doomerism has been focused on white collar jobs because they're not unionized and it's easier to simulate the ability to code and produce hallucinatory powerpoints than it is to automate a factory floor and exceed production targets.
- mrguyorama 8mo agoAmerican labor was already automated away. That's why all the blue collar folks thinks "They" sold our jobs overseas when America still produces a shitload of stuff in factories. So, frankly, we know what this looks like: Poverty, a drastic reduction in social mobility, continued disparity between the Haves and HaveNots, good jobs replaced with shitty jobs and now the gig economy is played out so not exactly anything remaining to soak up surplus labor especially surplus overeducated labor, anger, frustration, depression, increasing deaths of despair, violence, political instability, and mobs of people rallying behind populists and possibly continuing to support those populists through violence.
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- fuzzfactor 8mo agoZIRP was all used up a while ago. No more dry powder in that department.
- paxys 8mo agoI'm not saying it is totally untrue, but this is the same generic, hedged statement that every business and political leader has been repeating for a couple years now. Unless there's anything new or noteworthy added (and looking at the article there isn't) what is really worth discussing?
- hackyhacky 8mo agoWhat's new is who is saying it, i.e. people with better understanding of the economy than you or I.
- paxys 8mo agoPeople in much more important and powerful positions than her (presidents, CEOs of multi-trillion dollars companies, top economists, heck Jerome Powell himself) have been saying this exact thing in countless interviews and business forums. She is hardly the first.
- hackyhacky 8mo ago> people with better understanding of the economy > People in much more important and powerful positions than her I said "understanding," you said "power." There's a difference: presidents and CEOs say lots of dumb stuff.
- janalsncm 8mo agoThey linked to the economic report article: https://www.reuters.com/world/us/us-third-quarter-productivity-growth-unrevised-2026-01-29/ https://www.reuters.com/world/us/us-third-quarter-productivi... Productivity up 5%. Productivity/dollar up 3% Q2 and 2% Q3 even as labor costs up 1%.
- keeda 8mo agoAnother source that has been finding labor productivity increases in national-level data, since 2024 now: https://www.stlouisfed.org/on-the-economy/2025/nov/state-generative-ai-adoption-2025 https://www.stlouisfed.org/on-the-economy/2025/nov/state-gen... > ... on average, industries with 1 percentage point higher time savings experienced 2.7 percentage points higher productivity growth relative to their prepandemic trend. We stress that this correlation cannot be interpreted as causal, and that labor productivity is determined by many factors. However, the current results are suggestive that generative AI may already be noticeably affecting industry-level productivity.
- Avicebron 8mo ago> While AI will offer "new opportunities," It would be helpful if this was articulated in depth. It's used as a shibboleth alongside "productivity" but it's rarely followed with the concrete details
- parpfish 8mo ago“Thanks to AI (and new immigration policies), there are tons of exciting new opportunities for Americans that want to pursue careers in: harvesting crops, installing roofs, or home health care”
- tbrownaw 8mo agoPrediction is hard, especially of the future. This isn't the first time they new technology has reshaped society, or even just the economy. How well were the results of prior things predicted ahead of time?
- mindwok 8mo agoIt’s not articulated in depth because nobody knows what opportunities there are on the other side.
- TeMPOraL 8mo agoImportant thing to remember is that "new opportunities", whatever they are, are neither for you nor your children to partake - they're for the people just entering the workforce. Those whose careers suddenly disappear, as well as their families and children, are too busy dealing with consequences of being suddenly thrown down a rung or three on the socioeconomic ladder.
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- eighty8days 8mo agoIs it AI that's causing problems or is the US govt finally acknowledging how high the bar is in general for getting employment? It's not just AI that has influenced that. More importantly, are they planning to do anything about it?
- root_axis 8mo agoI think it's always important to consider incentives when thinking about what institutional leaders are saying. > In a productivity boom such as this, a rise in unemployment may not indicate increased slack. As such, our normal demand-side monetary policy may not be able to ameliorate an AI-caused unemployment spell without also increasing inflationary pressure I'm not saying AI isn't impacting the employment market, but this statement isn't really about AI so much as it is an advance warning that inflationary monetary policy is unavoidable if all the people saying that software engineering is dead are correct.
- selridge 8mo agoOr that the fed is preparing us to expect higher levels of unemployment for the same level of inflation.
- root_axis 8mo agoPerhaps, but her phrasing seems to imply they will act to reduce unemployment, and we can also assume Trump will mandate that they do so once he takes control of the fed.
- almostdeadguy 8mo agoAs any president should in that scenario? I'm sorry, we're going to nuke professional class workers and let tech executives keep their 2026 money from the proceeds and let the losers go jobless? Not likely if you don't want a bloodbath. Let me be clear: fuck Trump, but any president who doesn't do that is out of their mind.
- selridge 8mo agoIt is not at all clear that monetary policy can actually work here, which is what the statement is saying. When your demand side policy doesn't work, it's just pushing rope. It doesn't matter if or how bad you want a certain outcome.
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- hunterpayne 8mo agoJust yesterday, Goldman and MS said the exact opposite. https://www.washingtonpost.com/technology/2026/02/23/ai-economic-growth-gdp-mirage/ https://www.washingtonpost.com/technology/2026/02/23/ai-econ...
- dhdjdkkdkd 8mo ago[flagged]
- gaogao 8mo agoNah, the articles are non-contradicting. That article focuses on how the spend mostly goes to imports, which decreases GDP. This one focuses on the effects on unemployment. It's very plausible that a decrease in interest rates right now would lead to more imports and AI spending, not increased employment.
- keeda 8mo agoTwo different things. My understanding is that the Goldman Sachs take was about the effect of AI investments (largely the humongous CapEx spends by the hyperscalers) showing up in the GDP. This is about labor productivity, a standard national-level economic indicator (see https://www.bls.gov/news.release/pdf/prod2.pdf https://www.bls.gov/news.release/pdf/prod2.pdf and https://fred.stlouisfed.org/series/OPHNFB https://fred.stlouisfed.org/series/OPHNFB) going up 4.9%, as reported in this article linked in TFA: https://www.reuters.com/world/us/us-third-quarter-productivity-growth-unrevised-2026-01-29/ https://www.reuters.com/world/us/us-third-quarter-productivi...
- etc-hosts 8mo agoWhich means we'll all work on expanding the welfare state? Which exists to take care of the unemployed portions of our population. Right?
- rchaud 8mo agoExpanded military recruitment will be the new welfare state.
- le-mark 8mo agoI’ve been a nay sayer up till two weeks ago when I actually sat down and coded a non trivial feature with AI and I was blown away. The problem was one that there may have been at most 5 open source versions that they had been trained on. Today I am planning an exit strategy. Anyone else considering what they’ll do in a post AI software engineering world?
- uejfiweun 8mo agoYeah, it's pretty wild, huh? I'm at one of the big tech companies and the strategy that I've fallen into is to basically just mostly coast, save / invest as much as possible, and hope that this gets me to a financial threshold of "permanently comfortable" before the job losses kick in. As for what happens after that, I'd really prefer not to have to do physical labor or trades. And it doesn't seem like any other white collar occupation is really going to be insulated, other than perhaps medical. So my strategy is to basically wait and see what society looks like after the transition and I guess I'll try and decide on something then?
- aabhay 8mo agoI would emphasize self reliance and sustainable living. Things like home ownership, dollar-resistant assets like gold, and self education in topics that matter to you and your existence. Another way to frame it is what would you do in a low trust environment where corporations and the government were not to be trusted. You would likely avoid things like bubble bursting AI stock investments, jostling for rank in a company, etc.
- le-mark 8mo agoIf post AI software engineering is a thing then this is NOT a bubble.
- almostdeadguy 8mo agoHow do you plan an exit strategy for something that may or may not obsolete a whole field in a matter of months? Not sure there's a real way to do such a thing.
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- drivebyhooting 8mo agoIf productive output really stays the same while employment (and tax revenue) drops, there are only two ways for the government to stay solvent: 1. Print money 2. Increase taxation That’s it. An eroding tax base necessitates one of those or a combination.
- lazide 8mo agosure, but also looking at the pattern of who is involved - they could also declare bankruptcy (even if federal gov’t bankruptcy isn’t actually a thing).
- tmaly 8mo agoCook says we are cooked should have been the title