Fed's Waller Sees AI Boosting Productivity, Income Growth

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00:00Now, there will surely be losers and winners from AI.

00:03I make no doubt about that.

00:07But aside from questions about how AI's gains will be distributed,

00:11there's a more fundamental matter of how they will be measured,

00:15even at a macro level.

00:18Firms are using AI to increase productivity.

00:20That's the payoff for a profit-maximizing firm.

00:25This gain in producing more output with the same inputs

00:28is counted in gross domestic product.

00:31And as a result, you're getting more output, the same number of inputs.

00:34Productivity per unit of input goes up.

00:37And that raises GDP and productivity growth.

00:40Now, in America, one common feature of great technological innovation

00:45has been an onslaught of competition.

00:48It has rapidly driven down cost

00:51and resulted in rapid and widespread adoption.

00:54If hardware and software innovation continue to drive down the cost of AI,

01:01then I see few barriers to its ongoing proliferation throughout the economy.

01:07That prospect clearly is driving the surge of AI investment,

01:10and we have seen.

01:12Will it continue?

01:13Well, that will depend on part whether AI delivers

01:16on the productivity increases that I believe it will bring.

01:19So labor productivity measures output per hour of work.

01:25The data is volatile,

01:26but the average growth of productivity over the past few years

01:29is slower over the last decade than the previous decade.

01:34A crucial question is whether AI will contribute

01:37to a resurgence in productivity growth.

01:41Any sustained productivity growth above 2%

01:44will tend to support rising real incomes

01:47and living standards without inflationary pressure.

01:51As a monetary policymaker,

01:53I'm hoping that that happens with AI.