A series of task forces designed to bring outside thinking to the Federal Reserve will include the “best minds,” Chairman Kevin Worsh said Thursday. For a task force that could be particularly consequential for the Fed’s management of the economy – on artificial intelligence – all those outside minds seem to be leaning in the same direction.
All members of Worsh’s AI Task Force believe that AI will be a transformative technology that will have far-reaching impacts on growth and productivity. This matches Warsh’s own views. He personally selected the members of the task-force.
The AI task force was one of five task forces launched by the Fed on Thursday. Its formal charge is “to assess the economic impact of new general purpose technologies, including artificial intelligence, to inform the Federal Reserve’s policy decisions.” It will be led by three outside advisors: venture capitalist Marc Andreessen, economist Charles I. Jones, and Xbox CEO Asha Sharma.
All have recently spoken or written in extremely positive terms about the effects of AI on the economy.
The Fed Chairman is a longtime supporter of the potentially transformative economic potential of AI. “Adopting this is probably as significant a change to the economy and businesses and households as we’ve ever made in our adult lifetimes,” Warsh said in his first press conference as president in June.
He said in 2025 that he believes advances in AI will be a reason for the Fed to cut interest rates, as it will help the economy grow faster without increasing inflation.
Venture capitalist Marc Andreessen speaks at the TechCrunch Disrupt conference in San Francisco on September 13, 2016.
San Francisco Chronicle/Heart Newspapers via Getty Images | Hearst Newspapers getty images
Warsh has been a personal friend of Andreessen for decades. Warsh also ran venture-capital investments for investor Stanley Druckenmiller after his tenure at the Fed ended in 2011. This expanded his Silicon Valley network and his wealth.
Andreessen made a fortune creating some of the Internet’s early web browsers and is now one of AI’s most vocal evangelists. “We’ve turned sand into ideas,” Andreessen told podcaster Joe Rogan in May, referring to the silicon that is the physical basis of AI chips.
Jones, the economist, shares Andreessen’s West Coast optimism. jones recently went on vacation from Stanford University to join the Anthropic Institute, part of leading AI firm Anthropic. Jones’ academic work has recently focused on the effects of AI on economic growth, making him an important voice in Wersch’s efforts to bring the Fed closer to his vision.
jones A recent paper notes that per capita growth rates have consistently averaged 2% for most of America’s history. “Nevertheless, if AI eventually automates almost all the weak links in the economy, economic growth could accelerate significantly, with rates potentially exceeding 5 percent per year,” they wrote.
The paper analyzes what Jones identifies as the weak links – aspects of the economy that would be difficult to automate – and also considers lower potential growth rates. But Jones clearly writes that AI “will likely be the most transformative technology of the modern era.”
Sharma, who became CEO in February MicrosoftThe Xbox gaming business has made strong statements in support of AI. But as the leader of an operating business, he made the rare decision not to prioritize AI. Even though Microsoft incorporates AI into all aspects of its products, Sharma chose not to put it front and center on Xbox, he said in a recent Bloomberg interview.
“Our console players are not excited about that experience,” Sharma said.
But this does not make her a skeptic. “Now, do I trust AI? Absolutely,” she said.
Three members of the task force did not immediately respond to requests for comment. The Fed declined to comment.
Where Warsh may face doubt is on the Federal Open Market Committee, which has the power to set interest rates. FOMC members discussed the question of whether AI could increase productivity at their June meeting, minutes of the discussion released this week show. The minutes said some FOMC participants accepted the idea that productivity gains would accelerate.
And yet they weren’t completely sold. “However, these participants commented that considerable uncertainty remains regarding both the timing and magnitude of potential productivity gains, which is expected to dampen the ongoing boost to on-demand AI adoption.”
Meanwhile, the embrace of AI by American tech companies is starting to have an impact on the economy. New York Fed President John Williams said Thursday he is concerned about the AI boom causing higher electricity and semiconductor prices.
Prices have gone up like “hockey sticks,” Williams said, with some components doubling and tripling. While AI is a “demand shock,” he said, it’s not clear whether it will be accompanied by the accompanying supply increases that will be needed to keep inflation down.
The Fed will meet again in late July, when it is expected to keep interest rates steady. It is expected that the task force will complete its work by the end of the year.