Search Results
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
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 ...
Speech
Sentiment and the Real Economy
I believe our economy’s performance is driven in important ways by sentiment, that is, the outlook and beliefs of consumers and businesses.At the end of 2018, considerable uncertainty led to large drops in sentiment. We then saw weak numbers in January and February. By the end of February, uncertainty had decreased, and now the data look quite strong.In my view, sentiment has become both more important and more volatile. The result is an asymmetry in which firms are much more cautious about the downside than they are optimistic about the upside. Both consumers and firms may have a higher ...
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
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 ...
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
What’s Ahead? Learning From The CFO Survey
Firms are currently navigating extraordinary uncertainty. The decisions they make about hiring, spending and investment will have implications for GDP growth, employment and inflation.Business sentiment surveys like The CFO Survey help us understand those decisions.The latest survey shows that CFOs are feeling slightly more optimistic than they were last quarter, although they remain concerned about demand and revenue. Firms also remain cautious about investing.The survey also suggests that employment will lag spending. Many firms have streamlined their operations in response to the pandemic, ...
Speech
A Practitioner’s Perspective on the Productivity Slowdown
The corporate world changed significantly during the 1980s and 1990s in ways that drove productivity growth. So from my perspective as a businessperson, the slowdown in productivity growth over the past decade is surprising.In my view, a major factor is business underinvestment over the past 15 years, driven by industry leaders and productivity leaders not investing in growth the way they once did.Another factor might be declining startup rates. Successful entrants drive innovation, which drives productivity. But the data show a massive reduction in entry rates in all states and all ...
Working Paper
The Past and Future of U.S. Structural Change: Compositional Accounting and Forecasting
We explore the evolving significance of different production sectors within the U.S. economy since World War II and provide methods for estimating and forecasting these shifts. Using a compositional accounting approach, we find that the well-documented transition from goods to services is primarily driven by two compositional changes: 1) the rise of Intellectual Property Products (IPP) as an input producer, replacing Durable Goods almost one-for-one in terms of input shares in virtually all sectors; and 2) a shift in consumer spending from Nondurable Goods to Services. A structural model ...
Discussion Paper
Assessing Manufacturing Business Conditions by Firm Size
Fifth District manufacturing activity, as measured by the Richmond Fed manufacturing composite index, has been sluggish over the past few years. To better understand these dynamics, we look at firms' reported performance by size. Specifically, we looked at the diffusion indexes for several metrics. Diffusion indexes are often used to understand if economic activity is improving, declining, or is unchanged. For example, with employee headcount, a positive value means that more firms reported increasing headcount, while a negative value indicates that more firms reported decreasing headcount.We ...