Has the AI boom hit the current account? The Fed is asking

The current account doesn't see it

The New York Fed's Liberty Street Economics blog, in a post by economist Julian di Giovanni this week, asks a blunt question — has the AI boom moved the U.S. current account? — and answers it with a no. Aggregate investment as a share of GDP has been, in his words, "remarkably steady" since 2023, when the AI capex buildout started in earnest, averaging 21.5% of GDP over 2023 to early 2026. The AI money is real, but it has coincided with weakness elsewhere — factory construction, non-technology equipment — so the total doesn't move. m:…4233

What did move is government dissaving. The current account deficit widened from about 2.2% of GDP in 2015–19 to about 3.7% since 2023, and di Giovanni pins it squarely on fiscal policy: government saving fell from roughly -2.2% to -4.0% of GDP over the same span. "Changes in fiscal policy have been the major driver of current account dynamics," he writes, "with no discernible investment channel." Business saving, meanwhile, averaged 10.9% of GDP — in line with pre-pandemic levels — which he calls the salient difference from the dot-com era: this time the firms doing the investing are cash-generative. m:…4233

Waller sees it in prices instead

If the external accounts are blind to the AI boom, prices aren't. Fed Governor Christopher Waller told Bloomberg this week that the infrastructure build-out is creating demand-side inflationary pressure right now: "We're starting to see AI having a spreading out of inflation because it's just increasing demand for everything else." The productivity payoff, he cautioned, is years away — the typical lag for major technological changes. m:…7845

Waller also noted the bond market is "so obsessed with AI," and sketched the plumbing underneath: hyperscalers plan to spend trillions of dollars on AI infrastructure over the next three years, and capital inflows into the U.S. for AI investment can lift yields abroad by draining funds from other nations. Google issued a 40-year bond paying 100 basis points over Treasuries. The U.S., Waller said, remains the dominant builder of AI models — which suggests both the spending and the inflation impulse are concentrated at home. m:…7845

The long end has lost its anchor

Standard Chartered's Eric Robertsen and Madhur Jha, on the bank's Macro Freestyle podcast, describe a bond market coming unmoored. The long end of the yield curve in major developed economies "seems to have lost its anchor," they say, and they expect volatility to worsen over the next three to six months. Over the last six to eight weeks, the driver of rising Treasury yields has shifted from growth-led to risk-premia-led — a much less comfortable mix. m:…4122

Here is the tension the three sources create together. AI-related capex has, in Robertsen's words, "overwhelmed the downside risk" for growth — it is the offset supporting the expansion. The implication is that the same build-out feeds the inflation pressures Waller describes and the risk-premia shift StanChart's analysts see. For emerging markets it is a double whammy: rising borrowing costs plus a recovering dollar, tolerable only if the yield backup is growth-led. With U.S. dollar cash yielding 4%, Robertsen frames holding cash as an insurance policy that pays you while you wait. m:…4122

What a bank desk weighs

Put together, the message for a bank reader is oddly specific: don't look for the AI boom in the external accounts — the New York Fed's economist checked, and it is fiscal policy moving the needle there. Look for it in inflation prints, in capex-driven demand, and in a term premium that no longer has an anchor. And note di Giovanni's parting observation: the announced 2026–27 capital spending plans of the major technology firms are "considerably larger than what has already been built" — so whatever isn't visible in the aggregates yet may become visible soon. m:…4233 m:…7845 m:…4122