Federal Reserve Kashkari: AI is not the only engine of US economic growth; there are doubts about the “rest of the economy is shrinking”

The Zhitong Finance App learned that Minneapolis Federal Reserve Chairman Neil Kashkari said that he doubts that the US economy is shrinking and that the only support comes from the artificial intelligence-related construction boom. At the New York Foreign Relations Committee event on Wednesday, Kashkari said, “I doubt that other parts of the economy are shrinking.” “If you look at corporate profits, many sectors of the economy are generally very strong, not just those directly related to AI construction.”

The Minneapolis Federal Reserve Chairman pointed out that the current US unemployment rate is 4.1%, the national layoffs are “very low”, and the national unemployment benefit claims are also “very low,” but he acknowledged that the housing market is under pressure.

“I think many sectors of the economy are doing well. But AI is clearly the real engine of growth.” he said.

Federal Reserve policymakers voted unanimously to raise interest rates by 25 basis points at the September 15-16 meeting, the first rate hike since 2023. According to the median forecast, they also support another rate hike this year and another rate hike next year.

Kashkari said his predictions were in line with the median, but added that the new data could change his outlook.

He said that inflation is still too high, and he hopes the Federal Reserve can curb price growth through moderate adjustments.

Bank of America officials are increasingly concerned that inflation is not limited to categories affected by the Middle East conflict or tariffs.

“Energy penetrates almost everything we buy.” Kashkari said. “Go talk to the company. Transportation costs are rising across the economy, both because of fuel prices and labor supply.”