Economic Conditions and Monetary Policy

AI is framed as a general-purpose technology on par with or exceeding the steam engine, electricity, and the internet. Companies have spent only a small fraction of the $2 trillion in announced AI investment plans. Total inflation is estimated at 3.8 percent into August and core inflation at 3.4 percent, still above the 2 percent target. Unemployment was 4.1 percent in August and the labor market is roughly in balance. Nearly half of small employer firms are using AI, and 71 percent report increased productivity. Firms with fewer than 500 employees are more than 99 percent of U.S. firms and 61 percent of net new job creation since 1995. AI adoption is happening faster than PC or internet adoption at comparable points. In the short term AI adds inflation pressure; the medium term is labor-market transition risk; the long term is productivity optimism, with the dual mandate in view. As-of Mon 28. Federal Reserve. https://www.federalreserve.gov/newsevents/speech/cook20260928a.htm