Fed Chair Warsh Calls AI a 'Hinge Point in History'—4 Key Things He Said

In brief

• Fed Chair Kevin Warsh dedicated a full section of his Jackson Hole keynote to artificial intelligence, calling the current moment a "hinge point in history."
• Warsh said annualized sales at the two leading AI labs now top $100 billion, an increase of more than 500% from a year earlier, and confirmed the Fed now treats AI as "potentially a new factor of production."
• Warsh flagged that he's watching AI's "second derivative"—whether capital-spending growth is still accelerating.

Kevin Warsh's first Jackson Hole keynote as Federal Reserve chair made headlines mostly for what he refused to say about interest rates. But in the middle of the speech, under the header "Preparing for Future Policy Conjunctures," sits the section that matters most for anyone tracking where AI money is actually flowing.

Warsh opened it by describing the mood before AI took off: Economists spent the years after the 2008 crisis warning of "secular stagnation," a world with too much capital chasing too few good investments because, as Warsh put it, "all the good stuff had been invented." That thesis, he said, no longer holds.

He backed it with numbers. Business capital expenditures—what he called "the seed corn of future economic growth"—are rising at their fastest pace since 2021, up roughly 9% over the past four quarters, with more than half of that growth tied to AI buildout. What he'll be watching from here, he said, isn't the level of that spending but "the second derivative"—whether the growth rate itself keeps accelerating or starts to fade.