# Fed’s Daly warns regulatory hurdles curb AI productivity gains

**Published:** 2026-05-29T18:33:50.000Z  
**Topic:** Crypto Adoption  
**Sentiment:** bullish  
**Publisher:** TrendWatcher — https://www.trendwatcher.in/article/54f22e4c-c297-4772-8241-bd579b39b544

San Francisco Fed President Mary Daly says state AI rules and inertia limit productivity growth, but sees early “green shoots” and remains cautiously

Federal Reserve Bank of San Francisco President Mary C. Daly told a May 29 audience that the United States’ productivity boost from artificial intelligence is being throttled by a patchwork of state regulations and corporate inertia, rather than by a lack of technology itself [1].

**Key takeaways**  
- State‑level AI regulations create compliance costs that hit startups harder than large firms [1].  
- Daly sees “green shoots” of productivity improvement in sectors such as call centers, software development, and financial services [1].  
- She argues that merely adopting AI tools is insufficient; firms must reorganize processes to capture broader gains [1].  
- The Fed president does not anticipate mass unemployment or large‑scale worker displacement from AI, describing the technology as a net productivity driver [2].  
- Daly calls for a micro‑level, business‑focused data approach—mirroring Alan Greenspan’s 1990s IT strategy—to better gauge AI’s economic impact [1].

## Regulatory friction and the productivity paradox  

Daly highlighted a “productivity paradox” reminiscent of the 1980s PC boom, where heavy investment did not translate into immediate aggregate gains. She noted that today’s AI spending shows a similar lag: while companies pour money into AI infrastructure, measurable productivity improvements remain modest at the national level and are concentrated in a few sectors—call centers, software development, and financial services [1]. The chief obstacle, she said, is not technological scarcity but regulatory fragmentation. State‑by‑state AI rules impose uneven compliance burdens, disproportionately affecting startups that lack the resources of larger corporations [1].

To address this, Daly advocated for a Fed approach akin to Alan Greenspan’s methodology during the 1990s information‑technology surge. Greenspan had urged the Fed to look beyond aggregate statistics and examine micro‑level business data. Daly wants the same granular outreach, expanding contacts with firms to collect detailed evidence of AI’s impact on productivity and employment [1]. This follows a February 17 speech to the Silicon Valley Leadership Group and San Jose State University, where she first called for more ground‑level data collection [1].

## Outlook on jobs and policy  

Despite the regulatory headwinds, Daly expressed confidence that AI will not trigger widespread job loss. She said she does not see evidence of mass unemployment or large‑scale displacement from AI, countering more pessimistic forecasts about rapid automation [2]. Instead, she pointed to early signs of efficiency gains across sectors, describing them as “green shoots” of productivity growth that could eventually support higher hiring and wage growth without sparking inflationary pressure [2].

Daly also reaffirmed a cautiously optimistic view of the broader economy, noting that monetary policy is “in a good place” and that the Fed remains focused on restoring price stability while avoiding unnecessary harm to economic activity [2].

## Why it matters  

Daly’s comments signal that the Fed is closely monitoring AI’s macroeconomic implications, but she warns that regulatory fragmentation could delay the technology’s full productivity benefits. By pushing for more detailed, firm‑level data, the Fed aims to better understand how AI reshapes output, wages, and employment—information that could shape future policy decisions. If state regulators address the compliance burden, the “green shoots” Daly observes may expand, potentially delivering the productivity surge that policymakers hope will sustain long‑term economic growth.

## Sources
1. Crypto Briefing — [Federal Reserve’s Daly cites regulatory barriers to AI-driven productivity growth](https://cryptobriefing.com/fed-daly-regulatory-barriers-ai-productivity/)
2. Tradingview — [Fed's Daly says she doesn't see mass unemployment or displacement from AI — TradingView News](https://www.tradingview.com/news/forexlive:7f247103d094b:0-fed-s-daly-says-she-doesn-t-see-mass-unemployment-or-displacement-from-ai/)
3. Federalreserve — [Federal Reserve Board - Artificial Intelligence (AI) Program](https://www.federalreserve.gov/ai.htm)
4. Investinglive — [Fed's Daly says she doesn't see mass unemployment or displacement from AI | investingLive](https://investinglive.com/centralbank/feds-daly-says-she-doesnt-see-mass-unemployment-or-displacement-from-ai-20260529/)
5. Fedscoop — [Here’s how federal agencies say they’re tackling AI use under Trump | FedScoop](https://fedscoop.com/how-federal-agencies-say-theyre-tackling-ai-under-trump/)

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Cite as: TrendWatcher, "Fed’s Daly warns regulatory hurdles curb AI productivity gains", https://www.trendwatcher.in/article/54f22e4c-c297-4772-8241-bd579b39b544