Fed Chair Powell Warns AI Reshapes US Job Market Amid Inflation Challenges

Federal Reserve Chair Jerome Powell has highlighted the disruptive impact of artificial intelligence (AI) on the American labor market, noting that while AI boosts productivity, it is also leading to hiring freezes, layoffs, and stagnant job growth. AI-driven automation is reshaping demand, particularly affecting mid-skill white-collar workers and accelerating wage polarization, which is contributing to economic bifurcation with wealthier households maintaining spending while lower-income groups cut back. Powell's warnings come amid a significant number of job cuts announced by major companies and concerns from workers globally, including millennials in India, where nearly half fear AI could displace their jobs within five years. This evolving labor landscape is creating personal financial insecurity, altering traditional employment pathways, and challenging the Federal Reserve's approach to inflation and monetary policy. Business leaders acknowledge AI's capabilities but also express caution, leading the Fed to closely monitor the situation as it balances fostering economic growth with mitigating labor market disruptions. Overall, AI's rapid adoption is proving to be a double-edged sword, enhancing productivity but complicating job creation and economic stability.