The CEO of the Federal Reserve Bank of San Francisco expressed optimism about artificial intelligence’s impact on jobs, saying that while companies are still figuring out how to best use the technology, there are early signs that AI is helping rather than harming workers.
Mary Daly, who oversees the Fed’s nine-state western district that includes Silicon Valley, weighed in on the state of the labor market at the Fortune Brainstorm Tech conference on Monday but declined to suggest when the next rate cut might come.
During a wide-ranging interview onstage at Deer Valley, Utah, Daly said the tech industry is still on the rise “because technology is bringing us all kinds of new things. Technology is helping to make better businesses, better lives and making the world a better place.”
Daly said the US labor market, which has been tight since 2021, is now easing up. According to the Bureau of Labor Statistics, the US unemployment rate hit 4.1% in June, the highest level in two and a half years. Companies are looking for ways to meet demand and get things done faster. Daly gave the example of Honeywell, which is suffering from a labor shortage, using AI to augment its workforce rather than replacing employees.
“They’re replacing jobs, not people, and people are turning to do other things,” Daly told an audience packed with venture capitalists and tech entrepreneurs.
“In the history of all technology, no technology has ever eliminated jobs,” she added.
The Federal Reserve was also expected to cut interest rates at least once this year, but has yet to do so. CBS News reports that inflation remains stubbornly strong, making the Fed cautious about cutting interest rates. Daly said he expects “policy adjustments over the next few quarters,” but gave no hints about how many or when interest rates will be cut.
Daly was also asked how lower interest rates might affect the valuations of fast-growing technology companies like Nvidia, whose market capitalization is now $3.16 trillion. He said valuations of technology companies fluctuate in ways that don’t necessarily move in tandem with the economy. “It’s not clear how changes in interest rates will affect valuations,” Daly said.
When asked about Donald Trump’s return to the White House, Daly took a cautious stance. The Fed is mandated by Congress to remain independent even when a presidential administration is hostile, Daly said. The Fed’s most important asset is its integrity, and its most important tool is the public’s trust, he said. “The American people are our shareholders. We must earn their trust and respect. [doing] “It’s a great job,” she said.
