Summary Entrepreneurs increasingly use AI to launch businesses, while economists debate its long-term impact on productivity, employment and economic growth.
WASHINGTON (Reuters) – Artificial intelligence is rapidly transforming the US economy, helping entrepreneurs build businesses more quickly while fueling debate over its long-term impact on jobs, productivity and economic growth.
One example is Here Now Health, a mental health platform serving children entering the foster care system. Founder Michelle Turner, who launched the company in January 2025, relied heavily on AI tools despite having no background in technology or business.
Working from her home in Virginia Beach, Turner used AI to learn startup fundamentals, prepare a business plan and refine presentations for investors. The company has since grown to 16 employees and is licensed in three US states to provide Medicaid-funded mental health counselling for foster children.
Turner said AI effectively became her personal startup adviser, helping her overcome barriers as a first-time entrepreneur without a business degree.
The growing role of AI has become a major focus for US policymakers, including the Federal Reserve, which is examining how the technology could reshape productivity, inflation, economic growth and labour demand. A panel established as part of a broader Federal Reserve review will specifically study AI's economic implications.
Some Fed officials have warned that AI could contribute to structurally higher unemployment by enabling businesses to produce more with fewer workers, while other economists argue the technology may increase returns to capital faster than wages, raising broader social and political concerns.
At the same time, companies are investing billions of dollars in AI infrastructure, including data centres, boosting economic activity but also increasing demand for electricity, labour and capital.
Jean Boivin, head of the BlackRock Investment Institute, said financial markets are weighing two competing narratives: one of scarcity driven by heavy AI investment, and another of abundance in which AI delivers major productivity gains and stronger long-term economic growth.
John Bailey, a senior fellow at the American Enterprise Institute who advised one of Here Now Health's investors, said AI is making entrepreneurship more accessible by reducing the time and cost required to start and expand traditional businesses.
While public debate has largely focused on AI-driven job losses, Bailey argued that the technology is more likely to transform and redistribute work than eliminate it entirely, similar to previous waves of technological innovation.
