Staff Reports
Federal Reserve Chair Kevin Warsh told G20 finance ministers in Asheville that the gloomy idea of “secular stagnation” is no longer the right way to think about the world economy. He says we are in a global investment surge driven by new technologies like AI — and that claim already has markets and policymakers squinting at their playbooks. If you like clear forecasts, welcome to a plot twist.
Warsh Declares Secular Stagnation Dead — What He Said in Asheville
At the opening session in Asheville, Federal Reserve Chair Kevin Warsh said the phrase “secular stagnation” now “seems like a description of a past long ago.” He repeated the same theme he laid out at Jackson Hole earlier this week: we are at a “hinge point in history,” with large pools of capital flowing into AI and other big projects. In short, Warsh said the old story of a global savings glut and permanent low growth is being replaced by a global investment surge.
Why this matters for Fed policy and markets
This is not just intellectual cheerleading. Warsh’s comments have a real effect on how the Fed and markets behave. His Jackson Hole tone pushed short‑term Treasury yields higher and made traders price in a greater chance of near‑term rate moves. Warsh also signaled a hawkish streak: if inflation doesn’t keep moving toward the Fed’s goal, more tightening is on the table. Translation: faster growth talk plus higher rates is now a live scenario.
AI, capital flows, and the growth-first argument
Warsh points to rising investment in AI infrastructure as concrete evidence the economy’s engine is revving. That matters: if private capital is chasing big productive opportunities, it raises the odds of higher long‑run growth and higher neutral rates. Treasury Secretary Scott Bessent and other U.S. officials have pushed a “growth‑first” frame at the meeting, and Warsh’s line gives that frame intellectual cover — while also creating a political test. Can regulators and lawmakers get out of the way and let the surge widen, or will red tape and geopolitics slow it down?
Call it a welcome reality check. For years the left and a few timid technocrats treated low growth as inevitable and policy as eternal babysitting. Warsh’s message rips off that Band‑Aid. Conservatives should cheer a debate that puts investment and deregulation back at the center. But be clear: the Fed is not declaring victory over inflation. Warsh’s optimism on growth comes paired with a reminder that higher growth and higher inflation can arrive together — and the Fed will act if needed. The smart move for lawmakers is obvious: remove barriers to investment, protect the entrepreneurial spirit, and stop treating growth as if it were a crime. Warsh gave the economy a vote of confidence — now Washington needs to stop arguing and start enabling it.
