Fed Governor Warns AI's Economic Boom May Come With a Human Cost

In a clear-eyed speech this week, Federal Reserve Governor Lisa Cook laid out the central bank’s dilemma: artificial intelligence is poised to supercharge the economy, but it may first displace American workers. Her February 24 remarks represent one of the Fed’s most direct engagements with AI as a force that will shape monetary policy and labor markets.

Cook acknowledged AI is already remaking industries. While she highlighted the technology’s vast potential to lift productivity and ease inflation, she was equally blunt about the immediate risk of job losses. "We must prepare for a period of significant economic adjustment," she said, according to Reuters.

This tension defines the current moment. After years of sluggish growth, AI promises a historic productivity surge. Yet history shows such transitions can be brutal for workers, even when the overall economy gains. A recent IMF report estimates 40% of global jobs are exposed to AI, with high-skilled roles in law, finance, and tech particularly vulnerable.

For the Fed, this creates a new policy puzzle. Can it manage a scenario where AI simultaneously cools prices through efficiency but heats up unemployment? Cook’s warning suggests the bank is preparing for that possibility. The speed and cognitive nature of this automation wave, she noted, may differ from past technological shifts.

The path forward, Cook indicated, will require more than interest rate moves. It will hinge on education, retraining programs, and safety nets to help workers adapt. As Wall Street bets on AI-driven profits, the Fed is signaling that the human side of this equation will demand equal attention in the years ahead.