Fed's Kashkari: "AI is not the only driver of economic growth"

Fed's Kashkari: "AI is not the only driver of economic growth"

Minneapolis Federal Reserve President Neel Kashkari expressed skepticism about claims that the U.S. economy is contracting, excluding the construction boom related to artificial intelligence (AI).

Kashkari emphasized this at a New York event hosted by the Council on Foreign Relations (CFR) on the 30th of last month (local time), stating, "If you look at corporate profits, they are very strong across many sectors of the economy, not just those directly related to AI."

He said, "Many sectors of the economy are doing well," but added, "AI is a clear and genuine growth engine."

As evidence for these claims, he cited not only the low unemployment rate of 4.1% but also very low numbers of layoffs and unemployment benefit claims nationwide, though he acknowledged that the housing market is under pressure.

Kashkari added that his future interest rate hike projections align with the median, and his outlook could change depending on new data.

He said he hopes the Fed can curb inflation with modest adjustments because inflation is still too high.

Kashkari said, "Energy costs affect everything we buy," adding, "Talking to businesses, logistics costs are skyrocketing across the economy due to rising fuel costs and labor issues."