Fed governor lays out 3 AI scenarios, including one with a giant population of ‘unemployable’ workers

Fortune

by Catherina Gioino

February 19, 2026

AI-Generated Deep Dive Summary

Federal Reserve Governor Michael S. Barr has outlined three potential scenarios for how artificial intelligence (AI) could shape the future job market in his recent speech. He warned of a "jobless boom" where AI leads to widespread unemployment, particularly if workers are unable to adapt due to limited education and training. This scenario envisions AI replacing large portions of the workforce across industries like transportation, manufacturing, and services, creating a labor market with many "unemployable" individuals. Barr emphasized the need for significant changes in workforce development to mitigate these risks. In another scenario, Barr described a potential AI "bust," where the technology fails to meet expectations due to factors like data shortages or insufficient funding. He likened this outcome to the limited impact of social media or smartphones, suggesting AI could become ubiquitous but not revolutionary. This scenario would shift risks from the labor market to the financial sector, potentially causing instability if AI adoption stalls. Barr also proposed a balanced path where AI is adopted gradually, following patterns similar to previous technological revolutions. He referenced the dot-com boom as an example of managed growth, suggesting that careful diffusion of AI could avoid extreme outcomes and allow for sustainable economic progress. Throughout his speech, Barr highlighted the importance of addressing both the opportunities and challenges posed by AI, particularly in ensuring that economic gains are shared equitably. These scenarios underscore the critical need for businesses, policymakers, and individuals to prepare for the transformative potential of AI. For business leaders, understanding these pathways is essential for strategic planning, whether it involves investing in AI or focusing on human-centric industries. As AI continues to evolve, its impact on employment and economic growth will likely dominate discussions among stakeholders across all sectors.

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Originally published on Fortune on 2/19/2026