Finance News
By James Thorp
1 / 15
AI Spending Soars at Breakneck Speed. The investment figures are already here. Corporate spending on equipment and intangible assets…
2 / 15
A Headache for Monetary Policy. Warsh pointed out something structurally complicated for the Fed.
3 / 15
Who Will Really Win—and Who Will Miss the Train. The increase in AI spending does not guarantee that everyone will benefit.
4 / 15
Kevin Warsh made it clear at Jackson Hole: artificial intelligence could fundamentally change the growth potential of the United States.
5 / 15
But here's the problem. The Fed still doesn't know when productivity gains will truly materialize, how employment will evolve, or which companies will benefit.
6 / 15
The investment figures are already here. Corporate spending on equipment and intangible assets rose by nearly 9% over the past year—their fastest pace since 2021.
7 / 15
And Warsh cited another striking figure. The two leading AI labs report annualized sales exceeding $100 billion, an increase of more than 500% in one year.
8 / 15
It's still unclear if these figures will hold. The Fed is monitoring what it calls the "second derivative" of investments—in other words, not just the level of spending, but…
9 / 15
Warsh pointed out something structurally complicated for the Fed. If AI becomes a real "factor of production"—in the economic sense—it could accelerate growth without causing…
10 / 15
But a calibration error can be costly in both directions. Underestimating AI's productivity gains, and the Fed keeps rates unduly high, slowing an economy that could run faster.
11 / 15
Related: Dollar Surges Near One-Week High as PCE Data Fuels Fed Rate Concerns
12 / 15
Related topic: The dollar remains stable as Warsh warns that the Fed's fight against inflation is far from over
13 / 15
A group of experts is currently working within the Fed on AI-related employment and productivity issues to inform future monetary policy decisions.
14 / 15
Companies using AI could reduce their costs or increase their production. End users might benefit from more affordable or efficient services.
15 / 15
Regarding employment, Warsh has clear concerns. AI could complement some human tasks or replace others—it depends on the fields and the pace of adoption.
The Currency Analytics
Want the full story?