Fed policymaker: Anyone claiming AI certainty is “a hubristic fool”

Federal Reserve Governor Stephen Miran said Thursday that predicting artificial intelligence’s impact on the U.S. labor market is “very difficult to anticipate,” despite AI’s potential to significantly boost productivity growth. Speaking at Semafor’s World Economy Summit, Miran dismissed anyone claiming certainty about AI’s labor effects as “a hubristic fool,” highlighting the uncertainty even top economic policymakers face as they navigate AI’s integration into the economy.

What he’s saying: Miran emphasized both AI’s promise and the inherent unpredictability of its economic effects.

• “I think AI has the potential to really raise the productivity growth rate in the economy, which would be great,” Miran said. “I think it’s very difficult to anticipate exactly how it’s going to shake out in the labor market.”
• “I don’t know exactly how AI is going to shake out; I don’t think anybody does,” he added later. “And if anybody gave me complete certainty about how AI is going to shake out, I’d probably laugh at them for being a hubristic fool.”

Why this matters: Miran’s comments reflect the challenge facing central bankers as they attempt to set monetary policy while AI reshapes fundamental economic relationships between productivity, employment, and inflation.

The productivity paradox: When asked if AI could be deflationary, Miran acknowledged the complex dynamics at play without offering definitive predictions.

• Higher productivity growth from AI could theoretically reduce inflationary pressures by making goods and services cheaper to produce.
• However, the timeline and magnitude of these effects remain highly uncertain, complicating the Fed’s dual mandate of price stability and maximum employment.

Broader economic context: Miran, who recently joined the Fed after chairing President Trump’s Council of Economic Advisers, also discussed other economic uncertainties affecting monetary policy.

• He argued for aggressive rate cuts, citing expected disinflationary pressure from housing costs and changing immigration patterns affecting population growth.
• On tariffs, he predicted that “the burden of the tariff will ultimately fall on the exporting countries” due to U.S. import flexibility.

The bigger picture: Miran’s candid admission of uncertainty about AI’s labor market effects underscores how even seasoned economists are grappling with technology’s unprecedented pace of change, potentially complicating traditional approaches to economic forecasting and policy-making.