Tom Barkin Says Firms Delay Hiring Amid Large AI Investment Plans
The Richmond Fed president said companies are weighing productivity gains, AI’s potential and economic caution as nearly $700 billion in investments were announced in one week.
Federal Reserve Bank of Richmond President and CEO Tom Barkin said companies are weighing artificial intelligence’s productivity potential against economic caution, with hiring decisions slowing amid substantial investment announcements.
Nearly $700 billion in artificial intelligence investments had been announced in one week earlier this year, Barkin said in a Sept. 22 speech. He also said firms were delaying hiring because of productivity gains, AI’s potential and economic caution.
The comments point to a labor-market effect developing through staffing decisions. Companies have yet to consistently turn efficiency gains in individual tasks into new workforce structures.
Barkin said the economy and labor market remain on solid footing, while businesses report strong earnings, productivity improvements and robust investment. Strong earnings and project backlogs are encouraging companies to redeploy capacity instead of making deep headcount cuts.
The Federal Reserve has also kept inflation and interest rates central to the economic outlook. “The demand picture hasn’t changed much. Unfortunately, we haven’t seen much change on the inflation front either,” Barkin said.
The remarks came eight days after the Federal Open Market Committee raised the federal funds target range by 25 basis points on Sept. 16, bringing it to 3.75%-4% effective Sept. 17.
Barkin has been president and CEO of the Federal Reserve Bank of Richmond since 2018. Before joining the Fed, he was a senior partner and CFO at McKinsey & Company.
