Podcast Summary: Bloomberg Talks

Episode: San Francisco Fed President Mary Daly Talks AI, Economy
Date: February 18, 2026
Host: Bloomberg
Guest: Mary C. Daly, President, Federal Reserve Bank of San Francisco
Location: San Jose State University

Overview of the Episode

In this episode, Bloomberg sits down with Mary Daly, President of the San Francisco Federal Reserve, for a timely conversation about the impact of artificial intelligence (AI) on productivity, the labor market, monetary policy, energy, and the broader US economy—particularly within the Fed’s 12th District. The discussion covers how AI-driven productivity gains are shaping economic growth, the challenges of measuring and attributing those gains, the evolving role of the Fed in adopting AI internally, and the anxiety and opportunities facing workers and businesses. The episode features audience questions focused on career development in public service, regulation, and optimism for the future.

Key Discussion Points & Insights

1. AI and Productivity: What’s Really Happening?

• On Productivity Gains:

  • US productivity rates have risen over the last 10 quarters, with a “just under 3%, 2.7%” annual rate, higher than the 50-year average (01:17).
  • Mary Daly: “It’s undeniable productivity growth has gone up. What’s not as clear is how long will that last?” (02:56)

• One-Time Adjustments vs. Sustained Growth:

  • Automating tasks or using AI for specific processes may provide one-time cost reductions but don’t guarantee ongoing productivity growth unless they scale across industries.

• Long-Term Impact:

  • For lasting change, AI must drive scale, foster new product design, and lead to new ways of generating revenue: “That's the thing that has a sustained productivity growth part.” (02:36)

2. AI, Workforce, and Inflation

• Balancing Productivity and Inflation:

  • Technology investments can initially boost demand and inflation; productivity gains can follow with disinflationary effects. The timing of these effects matters.
  • Mary Daly: “The investment part of any technology can actually boost demand… but then the productivity part comes and that can be, that's a disinflationary part.” (04:44)

• Profit Margins and Cost Structures:

  • Firms may be using AI for margin protection as they lose power to raise prices, but whether this is a transformative AI effect remains uncertain.

• Labor Market Anxiety:

  • Job anxiety is high, driven by both general economic slowdowns and AI’s rapid role in task replacement and workforce augmentation.
  • “No technology ever reduces net employment...but it does change what that employment looks like. And so there's a period of replacement... the next part is augmentation.” (09:58)

• Skills and Workforce Adaptation:

  • Workers need to focus on “durable skills”—being AI-ready and learning how to use AI to advance their own capabilities. (12:42)

  Notable Quote:
  “If you put off technology because you're afraid of it, then you won't be in the first place of trying to use the technology to further your own abilities.”
  — Mary Daly (13:42)

3. Energy, Data Centers & Regional Issues

• Energy Demand and Data Centers:

  • Current imbalance: Demand for power outpaces supply due to surging demand, aging infrastructure, and supply chain issues (07:09).
  • Mary Daly: “The remedy for that isn’t to take away demand, it’s to increase supply... the CEOs of power companies are saying, but if we just keep building, [prices] will go down.” (07:55)

• Local Concerns:

  • Residents are worried about rising energy prices before potential long-term disinflationary benefits from increased supply materialize.

4. AI Inside the Fed: Adoption and Use Cases

• Fed and Monetary Policy:

  • AI is not currently used for monetary policy decisions, but is helping with research and operations.
  • “AI doesn't give you answers to problems. It helps you get to the discovery perspective.” (14:23)

• Fed as Early Adopter (Carefully):

  • Since 2023, the Fed has built ring-fenced practice environments to upskill staff and explore vendor tools.
  • Focus on operations: AI assists with cash processing, payments, coding, and resilience—but risk management and public trust are paramount. (17:40)
  • “If you turn the service on before your team is ready, you don't really get an ROI out of it.” (18:41)

5. Monetary Policy, Inflation, and Anticipated AI Effects

• Anticipated Productivity Gains:

  • The Fed relies on “evidence-based” policy; it requires confidence that AI-driven productivity gains are materializing before acting on rate changes.
  • Disaggregated data is key: looking for sectors where AI adoption leads to less price pass-through (21:15).

• Current Labor Market Observations:

  • Most job growth is in healthcare and education; other sectors show stagnation or decline, increasing vulnerability to shocks (22:31).

• Economic Diversity & Future Risks:

  • More sectoral diversification is needed to prevent “vulnerability [turning] into fragility.” (23:12)

6. AI Across Sectors: Tech Versus Agriculture

• Contrasts Within the District:

  • While tech workers in AI enjoy high salaries, agriculture and other sectors are also quickly adopting AI—for crop resilience, weather forecasts, and factory automation.
  • Mary Daly: “Surprisingly far ahead of where you think... we're seeing the seeds of [AI generating new revenue], using it for product development, etc.” (24:51)

• AI as Equalizer or Divider:

  • Discussion on AI’s potential to be an “equalizing force”—will rural and less-resourced areas benefit as quickly as urban tech hubs?
  • “I think we need to interrogate is it an equalizing force as vigorously as we interrogate, could it be driving further inequality?” (26:23)
  • Decision-making power remains with society, not the technology.

7. Audience Q&A: Careers, Regulation, Optimism

• Advice for New Economists:

  • Be a “detective”—test theories, stay curious, and adapt skills to changing environments.
  • “The minute you get confident, you lose... You want to be confident in the moment and humble enough to ask again, is this right?” (28:19)

• On Regulation and Innovation:

  • Fed district presidents don’t make or supervise regulations, but Daly draws a vivid analogy:

    “If you pull too tight, it stops on a dime and you’re over the head. If you let go too much, it runs too fast and you’re over the back. It’s basically trying to manage the bridle so that you get the innovation you want without exposing...to harm.” (31:45)

• What Gives Mary Daly Optimism:

  • The “Why not?” entrepreneurial spirit of the 12th District, from Silicon Valley to the Intermountain West.
  • People see AI as something to harness for public good and economic opportunity, not something to fear (32:43).

Notable Quotes & Memorable Moments

• On Productivity Surges:
  “It’s undeniable productivity growth has gone up. What’s not as clear is how long will that last?” — Mary Daly (02:56)

• On Employment & AI:
  “No technology ever reduces net employment, not in the history of technologies, but it does change what that employment looks like.” — Mary Daly (09:58)

• On Workforce Anxiety:
  “Right now, worker anxiety is high… but it’s not the same thing as ‘AI is taking all the jobs.’ What we’re really seeing is AI is replacing tasks, augmenting workers.” — Mary Daly (11:32)

• On Learning and Adapting:
  “If you put off technology because you’re afraid of it, then you won’t be in the first place of trying to use the technology to further your own abilities.” — Mary Daly (13:42)

• On Regulation vs. Innovation:
  “If you pull too tight, it stops on a dime and you’re over the head. If you let go too much, it runs too fast and you’re over the back.” — Mary Daly (31:45)

• Optimism and Spirit:
  “It’s filled with entrepreneurs. It’s filled with people who have never heard the word ‘no.’ They just heard, ‘Why not?’” — Mary Daly (32:45)

Timestamps for Important Segments

| Timestamp | Segment | |-----------|--------------------------------------------------------------------------| | 01:17 | Productivity statistics, recent evidence, and questions about AI's role | | 03:59 | How AI could be changing productivity and inflation dynamics | | 06:34 | Data centers, energy supply, and price dynamics | | 09:19 | Labor market tensions: AI, task replacement, workforce anxiety | | 12:42 | Advice on durable skills and adapting to rapid technological change | | 14:03 | AI in Fed research and operations | | 17:40 | AI use within Fed operations (cash, payments, coding, resilience) | | 20:52 | How/when anticipated AI-driven productivity changes policy | | 22:31 | Labor market details: sectoral job growth, vulnerabilities | | 24:51 | AI adoption in agriculture and tech vs. rural contrasts | | 27:58 | Advice for new economists entering public service | | 30:15 | Balancing innovation and regulation | | 32:43 | Mary Daly’s sources of optimism for AI in the economy |

Conclusion

President Mary Daly brings a thoughtful, nuanced, and pragmatic approach to understanding the role of AI in shaping the US economy, balancing optimism about technological advances with grounded caution about their measurement, social impacts, and the enduring need for skill development. She urges humility in attributing current economic gains to AI, while emphasizing both the opportunities and challenges it presents for workers, businesses, and policymakers. Ultimately, she champions adaptation, continual learning, and a collaborative spirit to harness AI for the benefit of all.