Federal Reserve Chair Jerome Powell mentioned on Tuesday (July 2) that the Federal Reserve is currently investigating the potential effects of generative artificial intelligence (AI) on productivity, inflation, and the labor market. During a panel discussion at the European Central Bank's Forum on Central Banking in Portugal, Powell noted the significant investments being made in AI and the anticipation of a major impact. However, it is still too early to assess whether AI adoption will result in job elimination, job augmentation, or the creation of new jobs. Powell emphasized that while the central bank may not have control over these outcomes, they are consulting experts to evaluate the impact on productivity, inflation, growth, and potential displacement. The Federal Reserve is dedicating considerable time and effort to examining the potential effects, primarily focusing on AI types other than generative AI. The International Monetary Fund (IMF) previously stated that the employment impact of AI would be particularly significant in advanced economies.

According to the IMF, approximately 40% of global employment is susceptible to AI, with 60% of jobs in advanced economies potentially affected. While half of these jobs could benefit from AI integration, the other half may witness the delegation of tasks initially performed by humans to AI applications, which could potentially lead to lower labor demand, reduced wages, and decreased hiring. Citi also highlighted that the finance sector may be heavily impacted, with over half of all finance jobs potentially influenced by AI. The report mentioned that 54% of these jobs have a higher potential for automation, and an additional 12% could be augmented by AI. Insurance (46%), energy (43%), and capital markets (40%) were identified as industries with a significant potential for automation as well.