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(NewsNation) — The AI boom has galore drafting comparisons to the dot-com bubble, but Federal Reserve Chair Jerome Powell says the 2 aren't the same.
"This is different," Powell told reporters Wednesday. "The companies that are truthful highly valued really person net and worldly similar that."
During the dot-com era, by contrast, galore were "ideas alternatively than companies," Powell noted. "So there's a wide bubble there."
The Fed chair's comments travel amid concerns that concern successful AI whitethorn beryllium moving up of its payoff — leaving the stock market and broader U.S. system connected a perchance shaky foundation.
Just this week, Bill Gates told CNBC helium sees parallels to the net bubble, with immoderate winners — but a batch of losers.
"There are a ton of these investments that volition beryllium dormant ends," Gates said.
Even so, helium called AI the "biggest method thing" of his beingness and said, "Some of these companies volition beryllium gladsome they spent each this money."
In dollar terms, Google, Meta, Microsoft and Amazon are acceptable to walk astir $370 cardinal this twelvemonth connected information halfway operation alone, according to The Washington Post.
Harvard economist Jason Furman recently estimated that more than 90% of request maturation successful the U.S. system during the archetypal fractional of the twelvemonth came from conscionable 2 GDP categories — accusation processing instrumentality and software.
Powell acknowledged Wednesday that AI concern is "clearly 1 of the large sources of maturation successful the economy" but added that user spending remains the ascendant force.
"The user is spending and that's a big, large chunk of what's going connected successful the economy, substantially bigger than AI," Powell said.
But adjacent user spending comes with an asterisk. High earners person kept their wallets open, portion lower-income households are feeling the vigor — mounting up a "K"-shaped economy wherever 1 subdivision rises portion the different falls.
When asked astir the bifurcated economy, Powell said policymakers "think there's thing there," citing net calls from large companies that person highlighted increasing strain among lower-income consumers.
Powell's remarks came aft officials voted to cut involvement rates for the 2nd clip successful six weeks — a determination aimed astatine supporting the cooling labour market.
While it's unclear if that weakness has accelerated precocious owed to the authorities shutdown-driven data blackout, the cool-off has coincided with the emergence of AI.
"You spot a important fig of companies either announcing that they are not going to beryllium doing overmuch hiring oregon really doing layoffs," Powell said. "And overmuch of the time, they’re talking astir AI and what it tin do. So we’re watching that precise carefully."
He added that the exertion "could perfectly person implications for occupation creation."
