Fed's Daly says businesses 'cautiously optimistic'

Feb 17 (Reuters) - Federal Reserve Bank of San Francisco President Mary Daly on Tuesday said that what had been ?widespread uncertainty last year about ?the strength of demand has given way to cautious ?optimism among the business leaders she talks ?with.

"It's somewhat of a surprise ?to many ?of them, given that consumers have drained down their ?savings," especially among ?those with lower incomes, Daly told reporters after an event at San ?Jose State University. "But ?right ?now it's good...it's a buyers' market in the labor market."?

Daly said that businesses are ?still uncertain about how long consumer ?demand will stay strong, and are therefore cautious about hiring, especially with artificial intelligence potentially changing the kinds of workers ?they ?may need to have on ?staff.

Once they figure out how AI may ?change their business needs, she said, they can think about hiring to meet the demand that they need to meet.

"I'd say that cautiously optimistic is really where they're at," Daly ?said. "And with the policy adjustments we made last year, the economy in their ?mind feels well supported."

(Reporting ?by Ann Saphir; Editing ?by Andrea Ricci)