Neel Kashkari, president of the Federal Reserve Bank of Minneapolis [Reuters]
Neel Kashkari, president of the Federal Reserve Bank of Minneapolis [Reuters]

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, pushed back Wednesday against claims that the US economy is in effect contracting when AI-related investment is stripped out. While AI is clearly a key growth engine, he said corporate profits and employment figures show the broader economy remains fundamentally strong.

Speaking at a Council on Foreign Relations event in New York on Wednesday (local time), Kashkari said corporate earnings are showing broad-based strength well beyond AI-linked sectors. "If you look at corporate profits, they are very strong across many parts of the economy, not just those directly related to AI," he said.

"Many parts of the economy are doing well," he added. "There is no question that AI is a clear and genuine growth engine."

He pointed to a 4.1 percent unemployment rate and very low layoff and jobless-claims figures nationwide as evidence of underlying resilience, though he acknowledged that the housing market is under pressure.

Kashkari said his interest rate outlook is in line with the median projection and added that incoming data could shift his view.

He said he hopes the Fed can bring inflation under control through gradual adjustments, noting that price pressures remain too high.

"Energy costs affect everything we buy," Kashkari said. "When I talk to businesses, logistics costs are surging across the economy because of rising fuel prices and labor challenges."


mokiya@heraldcorp.com