Fed's Waller Says AI Productivity Gains Take Years, Investment Boosts Short-Term Demand

Federal Reserve Governor Christopher Waller said on October 13 that productivity gains from artificial intelligence typically take years to materialize and have not yet been fully reflected in economic data.

He noted that per-capita GDP is highly correlated with the extent of AI use in the workplace, and differences in AI adoption could widen future gaps in per-capita GDP.

Waller also said that trillions of dollars in AI investment are boosting short-term demand, with large cloud providers continuing to expand computing capacity, making such demand less sensitive to price changes. The rise in long-term U.S. Treasury yields mainly reflects growth expectations and fiscal concerns rather than rising inflation expectations. He described AI as a tool and said he does not believe it will end humanity within the next two years.