Federal Reserve Governor Warns AI May Raise Unemployment

Federal Reserve Governor Lisa Cook warned on February 24, 2026, that artificial intelligence is triggering a generational reorganization of work that could raise the U.S. unemployment rate and reduce labor force participation. Speaking at a National Association for Business Economics conference in Washington, Cook noted that job displacement may precede job creation, specifically impacting computer coding roles and entry-level positions for recent college graduates.

Cook cautioned that traditional demand-side monetary policy, such as cutting interest rates, may be unable to resolve AI-driven unemployment without triggering inflationary pressure. She suggested that non-monetary interventions, including education and workforce development, are better suited to address these structural challenges. She further noted that the full impact of generative AI on labor productivity and employment may take five to 10 years to quantify and could increase long-term income disparity.

Other Federal Reserve officials, including Vice Chair Philip Jefferson and Governor Michael Barr, expressed more optimism in mid-February, suggesting AI would act as a general-purpose technology that enhances productivity without causing unmanageable labor market shifts. Meanwhile, Goldman Sachs economist Pierfrancesco Mei projected that the unemployment rate could drift to 4.5% by the end of 2026 due to AI-driven displacement.