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The nation鈥檚 labor market is in the midst of long-term transformation 鈥� and central banker Jeffrey Schmid expects artificial intelligence to play a significant role in shaping the road ahead.

鈥淲e鈥檙e going through this structural change,鈥� Schmid said, 鈥渁nd I would argue that we鈥檙e going to actually need elements of AI to bolster the lower workforce numbers as we go forward.鈥�

AI鈥檚 role in the workforce was one of several insights Schmid, president and chief executive officer of the , shared with local business leaders at the sa国际传媒官网网页入口 Museum on Wednesday during an Economic Forum of sa国际传媒官网网页入口 meeting.

It was Schmid鈥檚 first time speaking at the event, which gathers some of the state鈥檚 most influential business leaders.

The meeting coincided with the Labor Department鈥檚 Wednesday release of January鈥檚 jobs , which said that U.S. employers added 130,000 jobs to the market last month 鈥� a number stronger than economists expected. January鈥檚 labor force participation rate of 62.5% changed little, sitting far below pre-pandemic levels.

Much of the January job growth came from the health care sector, which accounted for more than 60% of last month鈥檚 new jobs. Schmid said the growth in health care could be due to increased baby boomer retirements, which may be increasing demand for health care services.

The unexpected influx of jobs follows months of , which Schmid and several economists in part attribute to demographic shifts, including a tougher immigration policy implemented by the Trump administration. Collectively, retirements and immigration policy contribute to 400,000 jobs leaving the market per month, Schmid said.

Decreased birth rates are also expected to have some long-term effects 鈥� slowing down the 鈥減ipeline of people into the workforce鈥� 鈥� and not just for the U.S., Schmid said. China鈥檚 population could reduce to half of what it is today 74 years from now, according to a United Nations .

Schmid said these changes beg the question, 鈥淲hat are the jobs of the future?鈥�

鈥淲e鈥檙e going to have to start aligning our education systems (and) our skills training to what people are going to need to be skilled to do apart from what they鈥檙e doing today,鈥� Schmid said.

Schmid entered the top role at the Kansas City Fed in 2023, after years of building banks and businesses. Schmid represents the Tenth Federal Reserve District 鈥� including Colorado, Kansas, Nebraska, Wyoming, western Missouri and northern New Mexico 鈥� on the Federal Open Market Committee, which sets U.S monetary policy.

The committee is responsible for maintaining maximum employment and stabilizing prices to keep inflation capped at 2%. It does so through a variety of , including controlling how much banks can lend and setting interest rates.

The Fed lowered interest rates three times in 2025, a year during which Schmid had a voting seat. Schmid 鈥� who does not have a vote this year 鈥� voted against two of the cuts, concerns about inflation.

鈥淚 believe that inflation is an economic thief, and it can be most insidious to the lower half of our earners,鈥� Schmid said.

When interest rates are lowered, people often spend and borrow more money, which increases demand and can prompt businesses to raise prices. The Fed will sometimes raise rates to cool demand and drive inflation down. The personal consumption expenditures price index, the Fed鈥檚 preferred measure of inflation, rose 2.8% through November, according to the .

鈥淭he difference between 2 and 3% in a $30 trillion economy is it鈥檚 robbing you of somewhere in the neighborhood of $200 to $400 billion of purchasing power annually,鈥� Schmid said. 

In December, the Fed projected just one potential rate cut in 2026, but Schmid said the future is hard to predict because the central bank makes decisions in real time in response to newly released data. 

January鈥檚 jobs report included revisions that reduced the number of jobs created last year to 181,000, versus the 584,000 previously reported by the Bureau of Labor Statistics. President Donald Trump the bureau鈥檚 commissioner in August, alleging data manipulation after mid-2025 reports showed slower hiring. He White House economist Brett Matsumoto to lead the bureau in January, though that appointment is still subject to Senate confirmation.

Banking on the advantages AI could have on data collection, Schmid said he鈥檚 鈥渁ctually optimistic鈥� that the bureau will see fewer revisions in the future. 

In his Wednesday presentation, Schmid also touched on the importance of the Fed鈥檚 ability to act independently in the face of external factors and political pressures 鈥� including Trump鈥檚 criticisms of Fed Chairman Jerome Powell, whose term ends in May. Schmid said he has 鈥渮ero concerns鈥� about Trump鈥檚 to replace Powell, Kevin Marsh.

鈥淚 will miss (Jerome) Powell. From the very first moment I met him back in 2023, I considered him a principled, committed American,鈥� Schmid said. 鈥淚 think the nature of the job is complex. It's difficult, but I also believe that these things 鈥� here again, we're 250 years as a country 鈥� they鈥檒l work themselves out.鈥�

Schmid maintained that he is optimistic about the economy鈥檚 direction and touted tourism and Route 66 ties in sa国际传媒官网网页入口 鈥� one of the largest cities in the region that the Federal Reserve Bank of Kansas City oversees 鈥� as a strength for the area.

鈥淭he economy enters 2026 with considerable momentum,鈥� Schmid said, highlighting the nation鈥檚 productivity growth, consumer spending resiliency and AI-related investments. 鈥�... I am hopeful that the economy will outperform again this year.鈥�

Kylie Garcia covers retail and real estate for the Journal. You can reach her at kgarcia@abqjournal.com.