Fed Chair Warsh to weigh AI's economic impact at San Francisco forum as data centre backlash grows
Federal Reserve Chairman Kevin Warsh will host a public forum in San Francisco on Monday to examine how artificial intelligence may affect inflation, employment and economic growth. The event comes as a backlash against rapid data centre construction emerges after the US midterm elections and as AI
SAN FRANCISCO, Nov 13 — Federal Reserve Chairman Kevin Warsh will hold a public forum in San Francisco on Monday to examine the economic risks and benefits of artificial intelligence, as the technology's rapid buildout begins to drive up prices and stir political opposition. The event is the only scheduled public hearing among five task forces Warsh established this year to review major issues facing the central bank.
The forum comes after last week's midterm elections sparked a backlash against rapid data centre construction, raising concerns about deepening inequality and local land use. Oakland Mayor Barbara Lee has joined a movement to ban local data centre construction, saying AI must not become "a tool for harm, for discrimination, or for displacement."
Warsh, who attended nearby Stanford University with some of the tech industry's leading figures, has called AI a "hinge point in history." The forum will include three panels of speakers offering input on technology's implications for the economy and the labour market. Marc Andreessen chairs the task force focusing on AI, which Warsh now calls "super intelligence" in line with President Donald Trump's wishes.
For all of AI's potential to lower inflation through higher productivity, the frenetic buildout is having the opposite effect in the short term, driving up prices in a way that increasingly concerns many Fed officials. "You have this investment that is truly historic. You are talking railroad-plus-interstate-highways-historic," Richmond Fed President Tom Barkin said recently. "If that historic investment does not pay off and people scale back, you worry what is going to happen."
Fed Governor Lisa Cook reiterated concerns in September that AI would lead to "at least a temporary increase in the unemployment rate." Fed Governor Michael Barr said on Thursday the US should prepare for "serious short-term disruptions" to the job market depending on how fast AI is deployed and whether it remains broadly available and affordable to businesses of all sizes.
Warsh initially saw AI as providing a disinflationary free ride that could allow central bankers to keep interest rates lower than would otherwise be expected. Since arriving at the Fed in May, he has taken a more nuanced view, reflecting the uncertain timetable for productivity benefits, the potentially inflationary investment needed to realise them, and widely varying views about job-market impacts.
Barkin said he hopes the discussion on Monday will cover the full landscape of issues. "I'm hopeful we'll hear the strongest possible evangelist's view, as well as the strongest possible other view," he said. "Then we'll have a chance to wrestle with it."
