Businesses Eye AI to Trim Labor Costs, Says Fed's Barkin

In a revealing virtual discussion hosted by the National Association for Business Economics (NABE), Thomas Barkin, President of the Federal Reserve Bank of Richmond, highlighted a growing trend among companies. Faced with rising economic pressures, firms are increasingly considering artificial intelligence (AI) as a viable solution to reduce labor expenses.

Current Business Sentiment and Hiring Trends

Barkin pointed out that while there's a noticeable improvement in business sentiment across certain sectors, the pace of hiring remains sluggish. The cautious stance adopted by companies is largely attributed to ongoing challenges such as tariffs and supply chain disruptions.

The Role of AI in Future Cost Management

Although widespread layoffs are not on the immediate horizon, Barkin emphasized that businesses are keeping a close eye on operational costs. In scenarios where economic conditions become more stringent, AI could emerge as a particularly attractive tool for cost management and efficiency enhancement.