New York Fed: the AI boom has not widened the US current-account deficit; fiscal dissaving has

Serguey Asael Shinder16 October 2026, 14:323 min read

A post on the New York Fed's Liberty Street Economics blog, published on 14 October 2026 by economic research adviser Julian di Giovanni, asks why the AI investment boom has left the US current-account deficit largely unchanged, even though imports of semiconductors, servers and computing equipment have climbed sharply. Earlier work cited in the post found that AI-related goods reached 23% of US imports in 2025.

The framework. The author starts from the identity that the current account equals a country's gross saving minus its gross domestic investment. A country can import a great deal of capital equipment without running a larger external deficit, he writes, as long as it saves enough to pay for the investment. For the AI boom to widen the deficit, it would have to raise investment without a matching rise in saving.

Investment has not moved. Gross domestic investment averaged 21.3% of GDP in the five years before the pandemic, 21.5% over 2023 to the first quarter of 2026 — the period of the AI capital-spending acceleration — and 21.1% over the past four quarters. According to the post, the AI contribution to non-residential investment has been rising, but it has coincided with weakness elsewhere: the surge in factory construction after the 2022 industrial-policy legislation has faded, and investment in structures and equipment outside the technology sector has been soft.

Private saving has barely changed. Unlike the dot-com era, when private saving fell by nearly 3 percentage points of GDP between 1995 and 2000 as households spent out of equity gains, private saving has averaged 20.8% of GDP since 2023, against 21.3% before the pandemic. Business saving has averaged 10.9% of GDP over the past four quarters, in line with about 10.5% before the pandemic and above the dot-com trough of about 8.8%. The post attributes the difference to cash position: the dot-com build-out was led by young firms with thin or negative cash flow, while the AI build-out is concentrated among firms with large cash flows.

The fiscal side did the work. Government saving moved from about –2.2% of GDP in 2015–19 to about –4.0% since 2023. Relative to the end of 2019, the post decomposes a widening of the saving–investment gap of roughly 2.4 percentage points: government dissaving accounts for about 1.75 points, lower private saving for about half a point, and higher investment for essentially nothing. Over the same span the current-account deficit widened from about 2.2% of GDP on average in 2015–19 to about 3.7% since 2023. The author's conclusion: fiscal policy has been the major driver, with a smaller role for private saving and no discernible investment channel.

The caveat. The post warns that the announced capital-spending plans of the big technology firms for 2026 and 2027 are considerably larger than what has been built so far, and that the weakness in residential and non-technology investment will not last forever. If those drags fade as AI capital spending accelerates, both higher investment and lower business saving would push the deficit wider. The views are the author's, not necessarily those of the New York Fed or the Federal Reserve System.

Source: Federal Reserve Bank of New York, Liberty Street Economics — https://libertystreeteconomics.newyorkfed.org/2026/10/has-the-ai-boom-impacted-the-u-s-current-account/