MNI BRIEF: Fed's Cook: Generative AI Can Raise Productivity

Generative AI seems "promising" as a general purpose technology that will broadly transform the economy, making workers more productive and creating the conditions for greater wage growth consistent with stable prices, but the timeline of this transformation is still unknown, Federal Reserve Governor Lisa Cook said Friday.

"The labor market adjustment that follows as the economy adapts to technical change can affect maximum employment," she noted. "New technologies may displace some types of labor, but they can also raise the productivity and incomes of jobs they create or complement. The increase in consumption that follows may raise demand for labor overall."

The widespread adoption of AI will be a difficult transition for some displaced workers while many workers throughout the economy benefit, she said in remarks prepared for a National Bureau of Economic Research conference in Toronto. Economist should study ways to limit the labor-force disruptions of AI while capturing its job-creating potential, she said. (See: MNI POLICY: Lively Debate At Fed Over Possible R-Star Rise)