AI Powered a Small Business’s Fast Start and Growth

The Rise of AI and Its Impact on the U.S. Economy

Here Now Health is not an AI-based company, but its journey from a concept in founder Michelle Turner’s mind to a fully operational mental health platform for foster children has been deeply influenced by technology reshaping the U.S. economy.

Turner, working from her home in Virginia Beach, utilized AI tools to learn about startup culture, develop a business plan, and refine a pitch for early-stage investors. This approach helped secure funding, leading to the launch of Here Now Health in January 2025. The company now employs 16 people and is certified in three states to provide Medicaid-funded mental health counseling for children entering the foster system—a gap in care that Turner identified through her own experience as a foster parent.

“A mom of six kids who’s a first-time founder, who’s a sole female founder, should not be able to raise (venture capital). I don’t have an MBA. I don’t have these things to back me up,” Turner said. Using AI guidance to develop her funding pitch was “like going to a master’s level class every day from the robot. It was my startup advisor.”

The rapid emergence of AI has become a defining feature of the U.S. economy, drawing the attention of Federal Reserve officials who are trying to understand its potential to reshape productivity, growth, inflation, and labor demand. As part of a broader review launched by new Chairman Kevin Warsh, one panel will focus solely on AI and its implications for productivity. While AI has the potential to drive economic growth with less inflation, it also raises concerns about fewer workers being needed to produce the same output.

Some Fed officials have raised the possibility of an AI-driven economy with structurally higher unemployment. Analysts have also noted the steady decline in labor’s share of national income, questioning whether higher returns to capital are part of the AI future. This issue has significant social and political implications.

AI and the Changing Landscape of Business

Much like when companies such as Yahoo! and America Online fought to connect everyone to the internet, different AI models are now competing for attention and dollars. However, their offerings can perform complex tasks, solve problems, or write computer code—going beyond simple web shopping and searching.

Investment in data centers is driving overall growth, and in some cases, increasing power and labor costs. Scenarios around AI range from visions of abundance to mass unemployment, with banks, government agencies, and the military looking to exploit the new tools while also protecting against them.

“Markets are confronted with dramatically different competing narratives,” Jean Boivin, head of the BlackRock Investment Institute, said in a seminar with journalists. “We are framing this as scarcity versus abundance…Scarcity is the story of the moment” with the AI investment boom driving up some costs and demand for capital, but, “we are also talking about abundance…AI that can lead to significant breakthroughs…Growth that might be breaking out of a 2% world.”

The Empowerment of Entrepreneurs

Turner’s journey from non-profit manager to CEO of a growing company is becoming more common, according to John Bailey, a nonresident senior fellow at the American Enterprise Institute and adviser to one of the firms that invested in Here Now Health.

“For small entrepreneurs, things that used to take too much time or cost too much — the price to access has fallen close to zero,” said Bailey, who helped Turner develop the AI tools she relied on. “It is empowering entrepreneurs to scale faster and hire people. These are not AI companies. They are traditional companies trying to deliver services but do it faster, cheaper.”

Public debate remains focused on AI’s job-disrupting capacity, with rounds of tech industry layoffs attributed to it. However, Bailey believes the AI economy won’t kill jobs so much as change and rearrange them, much like previous technological leaps.

The Upside of AI

Torsten Slok, chief economist at investment firm Apollo Global Management, attributes a recent upturn in already-high new business formations to AI, which is “dramatically reducing the cost and complexity of launching a company. As these firms scale, they will create jobs.”

It may take years to determine how it all nets out. A recent jump in job creation has eased concerns that the U.S. was entering an era where technology would replace labor at such a pace that unemployment might rise and mark the first time that new general technology proved, on net, labor destroying.

Richmond Fed President Thomas Barkin said in an interview earlier this year he is wrestling with the employment risks AI might pose, but also struck by firms telling him it is easing worker shortages in some skilled occupations, a boost to supply.

“We are all quick to see the disasters, which is about jobs getting replaced,” Barkin said. But he said contacts in areas like auto repair or manufacturing generally “are still in a world of saying they cannot get enough workers,” and are leaning on AI to make whoever they can hire more productive.

The Challenges Ahead

The transition, however, may be painful. The globalization of world trade in the 1990s decimated longstanding U.S. manufacturing clusters. Programs to transition workers to new jobs were not effective. Over time, the narrowed opportunities in parts of the Midwest and South are felt to have contributed to a rightward drift in politics and “deaths of despair” from substance abuse.

Researchers in a recent study warned a similar shock may be developing for clerical, administrative or other workers, particularly those without college degrees who rely more on work experience to advance their careers. The Brookings Institution and Opportunity@Work study found about 23 million people whose logical next step in a career was into a job highly exposed to AI replacement—effectively putting them at risk of being stranded in lower-paying roles.

“Disruptions in these roles can have outsized effects on workers’ ability to move into higher-wage work,” the researchers wrote, with regional impacts focused in Florida, the Northeast, Texas, and California, hubs of the sort of work susceptible to AI disruption and a different geographic spread from the earlier manufacturing disruption.

For the Fed, both the outcome and the pace of the AI transition will be important, with short-term impacts potentially very different from those seen in the long run, when it will become clearer if a productivity boom occurs.

At his debut press conference, Warsh called AI the most important economic change “that we’ve had in my adult lifetime,” and said the U.S. “is ultimately going to be better off” because of it.

“But that certainly doesn’t mean it’s not going to be disruptive,” he said.