Atlanta Fed President: "US may face higher structural unemployment…hard to offset with monetary policy"

A growing view suggests the United States could enter a phase of higher structural unemployment amid the spread of artificial intelligence (AI) and broader structural shifts.

According to BlockBeats, a crypto-asset (cryptocurrency) industry outlet, on the 24th Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said, "The US may be headed toward higher structural unemployment, and that is something the Federal Reserve (Fed) cannot offset."

Bostic also noted that the shift to AI could complicate policymakers’ assessments. "The transition to AI could make it difficult for the Fed to understand the economy," he said. On assessing the labor market, he stressed that "to understand labor-market slack, it is very important to look at economic outcomes across different economic groups."

On Fed independence, he said he hopes the "guardrails" protecting the Fed’s independence remain in place. He also warned that "even if productivity improves, we must remain attentive to inflation," adding that "responses to short-term problems can create bigger problems over the long term."

Asked how Kevin Warsh, a former Fed governor nominated to be Fed chair, would respond to pressure from President Trump, Bostic said, "We’ll only know when that time comes." He added, "Chair nominee Warsh needs to build good relationships with central bank staff and colleagues."