Federal Reserve Chair Kevin Warsh devoted part of his Jackson Hole speech to artificial intelligence, calling the current moment a "turning point in history" — one that's moving faster than even the most optimistic forecasts from a few years ago.
Business capital expenditures are growing at the fastest pace since 2021, up about 9% over the past four quarters, and more than half of that spending is tied to AI buildout. Warsh said the Fed will be watching for what he called the "second-order change" in AI capex: whether the pace of growth keeps accelerating.
Warsh said two leading AI companies now have annualized token sales exceeding $100 billion, up more than 500% from a year ago. He described AI as "a new variable" for the Fed, and potentially a new factor of production that could influence economic growth and monetary policy.
At the same time, Warsh said there are still no clear answers on whether AI will deliver sustained productivity gains, whether token usage and labor are complementary or competitive, and whether the economic surplus created by AI will end up with AI labs, chipmakers, energy suppliers, or cloud providers.