Fed Chair Kevin Warsh calls 9% capex growth a global investment surge

Federal Reserve Chair Kevin Warsh told G20 finance ministers and central bank governors in Asheville, North Carolina, that the world is seeing a global investment surge powering growth and reversing past savings gluts that left capital in low-yielding instruments. Speaking at the opening plenary on August 31, his first international economic policy meeting since taking office in May, Warsh said earlier G20 gatherings had focused on a global savings glut and argued that secular stagnation no longer applies, while saying he wants a clearer read on growth prospects across member economies. He said he is considering whether the United States and other G20 economies can expand faster than the roughly 1.8% annual pace with muted productivity growth projected by traditional forecasters such as the Congressional Budget Office, calling underlying growth potential and productivity the key questions. Arriving from Jackson Hole, where he said the Fed would have more work to do if officials lack confidence inflation is returning to the 2% target and came closer than before to acknowledging that rate increases may be needed, Warsh has cited business capital expenditures up about 9% over the prior four quarters—the fastest pace since 2021—with more than half tied to artificial intelligence infrastructure, S&P 500 profits up more than 20%, and annualized token sales for leading AI models above $100 billion. Competing outlets for capital, including large bond issues to fund AI data centers and infrastructure, are soaking up excess savings and are seen as one factor lifting U.S. Treasury yields and borrowing costs, while Treasury Secretary Scott Bessent tied higher yields to stronger growth and dismissed concerns about the Treasury market and public debt after U.S. debt crossed $40 trillion in August. Markets continue to watch implications for inflation, policy rates and the neutral rate of interest.