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Discussion Paper
The Impact of Tariffs on Our Region's Firms
Given recent changes in U.S. tariff policy, we asked Fifth District firms how they expected to be affected by tariff policy in March. At the time, 80 percent of respondent businesses expected to be impacted. In our May surveys, we checked in with firms and found that 72 percent of respondents made business changes in response to tariffs on imports. Firms reported taking a variety of actions. Of the firms that reported making adjustments, most have or plan to increase prices, 47 percent have canceled or delayed capital expenditures, and 41 percent have adjusted hiring plans.
Speech
The Evolution of Technological Disruption
The economy has seen a number of disinflationary innovations in recent years. These innovations put “the wind at our back” when it came to containing inflation.But we've been through quite a storm over the last two years, and it is appropriate to ask whether anything has changed and if the wind has shifted in a more inflationary direction.We’ve seen vulnerabilities associated with a globally complex supply chain, investments in renewable energy, and changing demographics that may shift labor from being abundant to being scarce, all of which could result in rising cost pressures.It’s ...
Briefing
What Can News Shocks Tell Us About the Effects of AI?
ver since ChatGPT's release in December 2023, the idea of artificial intelligence (AI) and its promises or dangers for the future of humanity have captured the attention of both the public and policymakers. For instance, AI-based tools are now being introduced in business processes, such as Microsoft incorporating Copilot into Word or customer service increasingly moved to AI chatbots.This immediately raises the question of what the economic impact of AI will be. Will it be on the scale of the steam engine powering the Industrial Revolution? Or will it be more along the lines of the computer, ...
Briefing
Aggregate Effects of the Adoption of AI
AI is holding out the prospect of substantial productivity improvements. While the potential of AI may be large, it is uncertain how much of that potential will be realized and how fast it will occur. Recent estimates of the medium-term AI impact on labor productivity range from negligible to larger than the 1990s IT impact. But should AI meaningfully affect medium-term productivity growth, monetary policy is likely to respond by accommodating the increase in potential output. On the other hand, recalling the 1990s IT diffusion, one should not be too surprised that, even though AI is ...
Discussion Paper
Automation and AI: What Does Adoption Look Like for Fifth District Businesses?
Technological developments shift the kinds of skills needed in the labor force. From innovations in agriculture to electricity to the personal computer to the internet, technology has shaped the way we work and the types of workers we need to produce the goods and provide the services that consumers demand. The tight labor market of the last few years has provided employers with further incentive to find ways to use automation to increase the productivity of existing workers and even reduce the need to hire more. The opportunities of artificial intelligence (AI), particularly generative AI, ...
Briefing
Forecasting U.S. Productivity
Trend aggregate labor productivity and TFP growth are expected to increase over the rest of the decade.The three largest subsectors of the service economy — namely professional business services; finance, insurance and real estate; and education and health care — are expected to continue growing in the medium term, and their idiosyncratic productivity is expected to play an increasingly important role in aggregate productivity.
Journal Article
Features: South Carolina's Globalized Economy
A great deal of that wealth and growth — not just in Greenville, but across much of South Carolina — is the result of international trade, as these firms and others buy parts and supplies from abroad and sell many of their finished products on the international market. In 2024, for example, South Carolina exported $38 billion in goods, accounting for 11.6 percent of the Palmetto State's GDP. Manufactured products made up nearly all of that total ($37.2 billion). Foreign companies aren't the only active exporters: A total of 6,261 companies in the Palmetto State sent products abroad in ...
Speech
Rethinking the Office
Before the pandemic, the office was a core feature of modern life. It was prominent in the skyscraper architecture of downtowns, and in the professional attire sections of department stores. And it dominated popular culture, not only in the namesake TV show "The Office," but in the countless shows and movies centered around the workplace, from "The Mary Tyler Moore Show" to "The Devil Wears Prada."We have now had a two-year experiment with a different, home-based model. As we emerge from the pandemic era, some are abandoning offices altogether. Others are trying to make a full return to ...
Speech
What Could Happen if We Keep Washing Our Hands?
The pandemic has changed us. It reminded us how precious time with family and work-life balance are. It threatened baby boomers’ health while expanding their 401k plans, perhaps driving the recent surge in retirements. It even allowed us to discover hidden talents, like baking or gardening, increasing the value we place in our leisure time. Many of these shifts could dampen future workforce participation and productivity. But one change, if it persists, could be a force in the opposite direction — a productivity booster. We saw a dramatic reduction in flu incidence.Flu season comes every ...
Speech
To Invest in Infrastructure, Invest in People
The new administration has signaled its intent to propose an infrastructure program. That is good. We need investment in our country’s infrastructure. Our roads and bridges are long overdue for repairs. We lag behind other countries in high-speed transit and the shift to renewable energy. We have far too many schools and hospitals that need updating. And too many students in small towns and inner cities have been set back by their lack of broadband, worsening the educational disparities that existed even before the COVID-19 pandemic.Supporters of a large infrastructure bill also point to ...