Concerns Over U.S. Job Market by San Francisco Fed President

Mary Daly, the President of the San Francisco Fed, expressed her worries on Thursday regarding the “softening” state of the U.S. job market, suggesting it could become “more concerning” if the central bank doesn’t effectively “manage risk.” Her comments followed the Fed’s decision to implement its first interest rate cut of the year on September 17, a move reportedly influenced by rising pressure from President Trump.

During a recent event at the Silicon Valley Directors Exchange, Daly noted that the Fed’s choice to reduce interest rates was partly in response to a decline in inflation and a slowdown in the job market. “The rate cuts we made were designed to manage risk as we work toward a more optimal balance between our inflation and employment goals, with the possibility of further rate cuts,” she said, as reported by Reuters.

“The economy is slowing down a little bit,” she continued. “Consumers seem to be running through any surplus savings they had while also facing rising prices. Plus, there’s a restrictive monetary policy in place.” On September 23, Federal Reserve Chairman Jerome Powell described the current situation as “difficult,” highlighting inflation risks and underwhelming employment figures.

When questioned about the influence of artificial intelligence on the U.S. economy, Daly mentioned that while AI could bring significant changes, it’s worth noting that such shifts typically unfold over decades. “We’re in a unique position where the benefits could materialize sooner—not just due to AI itself but also because of our economic standing and how companies can utilize AI,” she remarked.

A report from Goldman Sachs suggested that the widespread adoption of AI might displace 6-7% of the U.S. workforce, indicating approximately 2.5% of jobs could be at risk due to AI-related changes.

Additionally, John Williams, President of the Federal Reserve Bank of New York, spoke to the New York Times on Wednesday, expressing support for further rate cuts this year. “I’m particularly focused on the risk of a deeper slowdown in the labor market,” he mentioned. He also stated, “We back lower rates this year, but we need to understand the implications of that.”