Fed's Kashkari says AI is causing a hiring slowdown in big companies

Neel Kashkari, President of the Minneapolis Federal Reserve, revealed on Monday that the rise of artificial intelligence (AI) is prompting major corporations to slow down their hiring processes. During an appearance on CNBC's "Squawk Box," Kashkari noted that numerous companies are experiencing significant productivity improvements attributable to AI. Kashkari shared insights from various businesses, indicating that AI is influencing their workforce strategies. He anticipates that this trend will lead to sustained low hiring rates and minimal layoffs in the labor market. However, he pointed out that smaller companies are not as heavily impacted by these changes, suggesting that the AI narrative predominantly revolves around larger corporations. The AI boom, which gained momentum following the launch of ChatGPT by OpenAI in 2022, has seen American companies investing heavily to integrate this technology into their operations. While the pursuit of enhanced efficiency and productivity is evident, concerns about job security and safety have also emerged alongside AI's rapid advancement. Despite these worries, Kashkari expressed optimism about the returns businesses are beginning to witness from their AI investments. He acknowledged that while some misallocations of resources may occur, many businesses are reporting tangible productivity benefits. "There are too many anecdotes of businesses using this and actually seeing real productivity gains," Kashkari stated, adding that firms that were once doubtful about AI are now embracing its potential.