Warsh: AI Could Join Labor, Capital, and Land as Fourth Factor of Production

Federal Reserve Chair Kevin Warsh said AI could become a fourth factor of production alongside labor, capital, and land, potentially raising the U.S. economy's non-inflationary growth ceiling.

In his Jackson Hole keynote address on August 28, 2026, Warsh cited annualized token sales exceeding $100 billion at two leading AI labs as evidence of an adoption curve not yet visible in official productivity data.

Business capital expenditures are growing at their fastest pace since 2021, with over half tied to AI infrastructure. Warsh said these considerations do not yet influence current rate decisions, with the fed funds target upper bound held at 3.75%.