Fed Chair Warsh calls AI a 'hinge point in history'

Fed Chair Kevin Warsh called AI a 'hinge point in history' and said it could become a new factor of production. Warsh made the comments in his first Jackson Hole keynote as Federal Reserve chair. He said business capital expenditures rose roughly 9% over the past four quarters. He said more than half of that growth was tied to AI buildout. Warsh said he is watching whether the growth rate continues to accelerate or starts to fade. Warsh said AI progress has been faster than its evangelists predicted a few years ago. He said capital is flowing into AI-related infrastructure. Warsh said annualized token sales at the two leading labs exceeded $100 billion, based on reports. He said those sales increased by more than 500% from a year earlier. Warsh said the Federal Reserve is following the market dynamics of the AI ecosystem. He asked whether AI would produce a significant and sustained rise in productivity across the economy. He also asked whether token usage would complement or compete with labor. A Federal Reserve task force is studying productivity and jobs. Warsh said the task force's findings have no bearing on decisions in the current policy conjuncture. Warsh questioned how much of any surplus would go to owners of scarce assets, including AI labs, chipmakers, energy producers, and cloud providers. Bill Gates has argued for a robot tax and jobs that humans cannot be fired from. Nvidia reported record quarterly revenue of $96.2 billion. Nvidia disclosed $366 billion in future AI infrastructure commitments. Nvidia also moved to acquire Hugging Face for roughly $12.9 billion. A report from a year earlier said 95% of generative AI companies were failing.