Fed Chair Powell Warns: AI Drives Near-Zero Job Creation Amid Labor Market Shift

Federal Reserve Chair Jerome Powell has offered a stark assessment of the U.S. labor market, suggesting that despite seemingly robust surface-level figures, underlying job creation is virtually stagnant, a phenomenon he links significantly to the rise of Artificial Intelligence.

Speaking at a press conference following the Federal Open Market Committee (FOMC) meeting on October 29, 2025, Powell highlighted a concerning trend. While headline unemployment stands at 4.3% and consumer spending remains solid, he indicated a quiet but noticeable loss of momentum beneath the surface. According to Powell, once statistical overcounting in payroll data is adjusted, “job creation is pretty close to zero.”

This slowdown, the Fed Chair elaborated, correlates directly with increasingly frank discussions from corporate leaders. CEOs are now openly informing investors that AI technologies empower them to achieve more with fewer employees, reducing the need for new hires.

Powell noted a “significant number of companies” have recently announced either widespread layoffs or strategic hiring freezes. Crucially, many of these organizations explicitly cite AI as the primary driver behind these workforce adjustments. “Much of the time they’re talking about AI and what it can do,” Powell explained to reporters, emphasizing that major employers are signaling a future where additional headcount may not be required for years to come. He concluded by stating the Federal Reserve is “watching that very carefully.”

This perspective from the head of the nation’s central bank underscores a growing concern about AI’s disruptive potential on employment trends, urging a closer look beyond traditional labor market indicators.