Fed's Lisa Cook: AI May Be Squeezing Some Entry-Level Jobs and Adding to Inflation

A top Fed official says new grads are feeling the job market shift first, and your utility bill may be feeling the AI boom too.

What happened

On Monday, Sept. 28, Federal Reserve Governor Lisa D. Cook gave a speech called "An Update on AI and the Economy" at the opening of Oakland Tech Week in Oakland, California. The Federal Reserve posted the full text on its website.

The Federal Reserve, or the Fed, is the U.S. central bank. It sets a key interest rate that affects what people pay on credit cards, car loans and more. As a governor, Cook votes on those rate decisions.

Cook made it clear she sees artificial intelligence as a very big deal. "AI is poised to become the most significant technological shift of our lifetime," she said.

What she said about jobs

Cook said the overall job market is still solid. "The unemployment rate has been trending down, with the most recent reading coming in at 4.1 percent in August," she said.

But she pointed to trouble at the starting line. "Many recent college graduates are facing more difficulty finding their first jobs," Cook said.

She also said there is evidence in some fields, "including coding jobs in the software industry and in simultaneous translation, that AI might be decreasing labor demand." Labor demand means how many workers employers want to hire.

What she said about prices

Cook said the rush to build AI is adding to some costs. Building data centers uses a lot of electricity, water and construction labor. "Electricity and water costs are each up around 5 percent over the past year, potentially attributable in part to AI," she said.

She also noted that inflation is well above the Fed's goal. "Total inflation rose an estimated 3.8 percent in the 12 months leading into August, almost double our target," she said. The Fed aims for 2% inflation.

Yahoo Finance reported that Cook warned the AI buildout and higher oil prices will keep putting pressure on inflation.

What she said about interest rates

Cook confirmed she supported the Fed's rate increase earlier this month. "I voted along with the rest of the FOMC to raise rates 25 basis points at the recent September meeting," she said. The FOMC is the Fed committee that sets rates, and 25 basis points equals one-quarter of a percentage point.

On what comes next, she said "the number and magnitude of any future adjustments will be informed by observations of the economy's reaction to our policy actions thus far." In plain English: future moves depend on the data.

Looking further out, Cook sounded hopeful. "In the long term, I am optimistic that AI-fueled productivity growth can raise living standards for all Americans," she said.

What this means for your wallet

If you are a student or recent grad, the first job may take longer to land, especially in fields where AI tools can do routine tasks. You could consider:

• Building skills that pair well with AI, such as problem-solving, communication and knowing how to use AI tools well.
• Getting real-world experience through internships, campus jobs or volunteer projects.
• Applying widely and tracking your applications so you can follow up.

Plan for a longer job search. Having even a small cash cushion can reduce stress if your first paycheck comes later than expected. A simple budget can show how long your savings could last.

Borrowing costs. With the Fed raising rates to fight inflation, credit card and other variable-rate debt could get more expensive. Keeping balances low may help.

Utility bills. If electricity costs keep rising, it may be worth reviewing your monthly bills and looking for simple ways to use less energy.