Cook highlights small business AI use, data importance
Federal Reserve Governor Lisa D Cook emphasized the critical role of small businesses in the U.S. economy. Speaking at a symposium, she highlighted the importance of high-quality data and a new survey finding on AI adoption.
AI adoption defies conventional wisdom
Governor Cook drew attention to a notable finding from the Federal Reserve's Small Business Credit Survey (SBCS): nearly half of small employer firms reported using artificial intelligence (AI) in some capacity.
Of these, 71 percent indicated increased productivity as a direct result of AI implementation.
This data challenges the conventional wisdom that large firms hold an inherent advantage in deploying advanced technologies like AI.
Cook, whose research prior to joining the Fed focused on innovation and entrepreneurship, expressed no surprise at this adaptability, recalling historical breakthroughs originating from startups leveraging frontier technologies.
The SBCS, now in its tenth year as a national survey, has expanded its scope to capture near-real-time credit conditions and operational challenges, providing timely insights into small business decision-making.
Understanding the U.S. economic engine
Small and new businesses, alongside entrepreneurship, are vital to the U.S. economy, driving job creation, expanding economic opportunities, and fostering vibrant communities.
Cook noted that 99.9 percent of U.S. businesses employ fewer than 500 people, and since 1995, these firms have generated 61 percent of net new jobs.
Monetary policymakers' actions significantly impact these firms, making high-quality data essential for achieving the Fed's dual mandate of maximum employment and stable prices.
The SBCS serves as a crucial resource, offering insights into firms' financing requirements, debt needs, and overall experiences, which are often unobservable in other economic statistics.
Adaptability meets opportunity
The survey's AI findings offer a compelling counter-narrative to the perception of small businesses as technology laggards.
While self-reported productivity gains always warrant cautious interpretation, this data strongly suggests a robust capacity for innovation among smaller firms.
It underscores the critical need for policymakers to ensure equitable access to credit, which remains foundational for these adaptable businesses to establish, grow, and continue their vital contributions to the economy.