AI Slowdown Seen as a Temporary Step to Investors

The rapid expansion of the AI industry faces a temporary cooling period as states like New York and Texas implement moratoriums on data center construction and labor concerns grow regarding job displacement. Jennifer Lee, Senior Economist at BMO Capital Markets, observes that while market reactions to recent industry shifts may be short-lived, a broader "pause" is occurring due to profitability challenges and declining global fertility rates, which ironically sustain long-term demand for automation. Simultaneously, the Federal Reserve faces mounting pressure following recent CPI and PPI data, with a rate hike expected at the upcoming September meeting. Fed Chair Kevin Warsh has maintained an increasingly hawkish stance, emphasizing that inflation must return to the 2% target at a sufficient speed. Future monetary policy remains strictly data-dependent, with the potential for multiple rate increases before the end of the year as the central bank balances productivity boosts from technology against persistent inflationary pressures.