Minneapolis Fed President Kashkari said he is skeptical of claims that the US economy is contracting everywhere except for the artificial intelligence (AI) infrastructure boom. Speaking Wednesday at a Council on Foreign Relations event in New York, Kashkari said: "I am skeptical of the notion that other parts of the economy are contracting. If you look at corporate profits, profits across many industries have risen sharply overall, not just in those industries directly tied to AI infrastructure buildout." Kashkari noted that the US unemployment rate stands at 4.1%, and that "layoffs nationally are low, and jobless claims are also low," though he acknowledged that the housing market is under pressure. He said: "I think many parts of the economy are performing well. But AI is clearly a real growth engine."

Fed policymakers voted unanimously at their September 15-16 meeting to raise rates by 25 basis points, the first hike since 2023. According to the median projection in the dot plot, there will be one more rate increase this year. Kashkari said his own forecast is in line with the median, but new economic data could change his projection. He said inflation is still too high, and he hopes the Fed can curb price increases through modest policy adjustments.