What do we know and what can we forecast about the implications of artificial intelligence for productivity and the economy?

In the lead up to the June FOMC meeting, businesses reported increased cost pressures, surprisingly resilient demand, and limited pricing power.

Sonya Waddell and John Graham share their research on the adoption of artificial intelligence in the workplace, based on the expected and realized effects reported by the financial executives who participate in the CFO Survey. Waddell is a vice president and economist at the Federal Reserve Bank of Richmond and Graham is a finance professor at the Fuqua School of Business at Duke University and director of the CFO Survey.

Artificial intelligence is taking root in the workplace and beyond. How will it impact labor productivity and the wider economy?

For the 200th episode of Speaking of the Economy, four economists at the Federal Reserve Bank of Richmond share their current research and how that work connects with the Fed's mission: Nicholas Trachter on the growth in firm size, Urvi Neelakantan on the relationship between going to college and investing in the stock market, Russell Wong on the impact of AI on employment, and Horacio Sapriza on the ability of central bank communications to stabilize financial markets.

By leveraging timely survey data from financial decision-makers, our study provides novel firm-level evidence on how AI is affecting productivity and the workforce.

How large are the effects of artificial intelligence (AI) on labor productivity and unemployment?

The Richmond Fed's December business surveys found that businesses were increasingly providing employees with access to artificial intelligence (AI) tools but were less likely to have incorporated AI into their operations.

Since the last FOMC cycle, businesses said growth has been solid, but narrow; the low-hire, low-fire equilibrium continues.

Anton Korinek provides insight on how rapid advances in AI might reshape the nature of work and how economists can help society prepare.

Will today's AI-related investment turn out to be a repeat of the 1990s telecom boom and bust?

Andy Bauer and John Bailey Jones discuss the factors that have shaped the demand for and supply of labor in recent years. They also talk about the barriers to labor force participation in Maryland, including lack of affordable child care and housing. Bauer is vice president and regional executive for the Baltimore branch of the Federal Reserve Bank of Richmond and Jones is vice president of microeconomic analysis.

Announcements regarding AI can have significant impact on the economy, even if the actual technology isn't enacted for a while.

Growing demand for carbon-free energy has put nuclear back in the spotlight, but hurdles to new development remain.

Pierre-Danie Sarte and Thomas Lubik discuss their research on the components of productivity growth, how that growth has varied over time and across industries, and how much it will benefit from the use of artificial intelligence. Sarte and Lubik are senior advisors in the Research Department at the Federal Reserve Bank of Richmond.

Vanity McDaniel and Jennifer Stadler provide a snapshot of how consumers pay for goods and services today and reflect on the latest technology trends in the U.S. payments system, including contactless payments, digital wallets, "buy now, pay later," instant payments, and the use of artificial intelligence. McDaniel is a senior payments business advisor at the Federal Reserve Bank of Richmond and Stadler is executive vice president of marketing and membership at PaymentsFirst, a payments industry association.

The contributions of various sectors to aggregate productivity growth have shifted significantly since World War II.

Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, looks back on recent economic trends and how they have shaped the current state of the national economy.

Pierre-Daniel Sarte and Sonya Waddell share survey results on businesses' use of AI tools and other forms of automation, and research on the potential effects of automation on the nation's overall productivity growth. Sarte is a senior advisor and Waddell is a vice president at the Federal Reserve Bank of Richmond.

As the capabilities of generative AI continue to improve, the CFO Survey can provide us insights on the impact these tools are having on firms and the growth of their productivity.

Technology improvements may not matter as much as the age and experience of the workforce.

Firms continue to innovate and automate, although responses from Fifth District business respondents illustrate that we are in the early days of AI adoption.

Nearly two-thirds of CFOs say their companies have a strategic priority to automate tasks typically performed by employees. Among firms that plan to automate in the next 12 months, a majority expect to implement AI to perform a wide range of tasks.

What are early studies suggesting about how AI may impact labor productivity?

Economic history and research can provide useful tools for thinking about the future of AI and the challenges and risks along the way.

Tom Bilston and Tony Murray of the Richmond Fed's bank supervision team discuss how banks use machine learning, chat bots and other forms of AI as well as what these technological innovations mean for bank examiners, both in terms of the risks they monitor and how they do their job.

MIT's Daron Acemoglu, the author of Why Nations Fail and Power and Progress, on Henry Ford, making AI worker-friendly, and how democracy improves economic growth.

Financial institutions have approached AI with cautious optimism, developing and implementing AI-based applications for things like customer service chatbots, detecting fraud, and evaluating creditworthiness. Bank supervisors are learning how to adapt.

Among the topics discussed were income growth volatility, AI's impact on productivity and how housing price changes affect young businesses.

University of Toronto economist on managing pandemics, allocating vaccines, and low-cost prediction with artificial intelligence.

Microsoft's former chief economist on conducting research at tech companies, entrepreneurship within large firms, and the effects of artificial intelligence on markets

Economists interested in AI have been puzzled by what some call a "productivity paradox," the gap between optimistic expectations about the economic effects of AI and the effects that appear in the data.

Whether it's a custom music playlist crafted for millions of users or interpreting X-rays and other scans, machine learning is having a substantial impact on a wide range of industries.