Jerome Powell has said that "Job creation is pretty close to zero," due to AI

Powell told reporters that the U.S. labor market is weakening, saying “job creation is very low, and unemployed workers are having a hard time finding new jobs.”

According to Fortune, Powell also said that a growing number of companies are contributing to the slowdown by freezing hiring or cutting staff, and many of them say the shift is tied to artificial intelligence.

“When we speak with major corporate executives, they frequently bring up AI and its potential,” Powell said. “We’re monitoring that closely.”

His remarks came right after the Federal Reserve lowered interest rates to roughly 3.75%–4.0%, the lowest level in about three years, as reported by CNN. The Fed has been navigating a difficult situation: unemployment is rising, yet inflation remains elevated.

Normally, in a functioning economy, inflation and unemployment tend to move in opposite directions — one goes up as the other goes down.

But in 2025, both are climbing at the same time. That dynamic is squeezing working households while leaving the Fed with few good options. As more people lose jobs, companies can use the fear of unemployment to keep wages down for the workers they still employ.

The result — driven in part by the hype surrounding AI — is an economy where wealth divides sharply: the affluent continue spending aggressively, while lower-income households fall further behind.

Powell summed it up bluntly: “Lower-income consumers are having a harder time. They’re cutting back, buying less, and trading down to cheaper products,” while wealthier consumers — and corporations — benefit from one of the strongest stock markets on record.