Mary Daly, President of the San Francisco Federal Reserve, says artificial intelligence is beginning to deliver real productivity improvements at specific companies and in certain sectors. But those gains have not yet appeared in the broader economy.
Productivity growth has risen from a historical average of 1.9% annually to 2.7% over the last 10 quarters. Daly cautioned that it is difficult to determine how much of that improvement is directly attributable to AI versus other factors.
In recent remarks from late May and early June 2026, Daly described what she calls "green shoots," acknowledging firm-level improvements while maintaining data on economy-wide productivity gains remains thin. She has drawn a parallel to electricity in the early 1900s, when factories had to be completely redesigned before electrification delivered its full productivity punch.
Daly identified regulatory and legal barriers as significant hurdles preventing AI adoption from translating into measurable productivity gains. Despite historically high investment enthusiasm around AI, the data does not yet show widespread benefits that would move the needle on overall economic trends.
Daly suggests the upcoming year could serve as a critical period for evaluating whether AI's economic effects are becoming more tangible. If AI can deliver durable productivity increases, economic output could grow faster without necessarily stoking inflation.