NY Fed Research: Why AI Capex Hasn't Widened the U.S. Current Account Deficit
New York Fed economist Julian di Giovanni explains that despite surging imports of semiconductors and servers, the U.S. current account deficit remains stable. The analysis reveals that AI investment is offset by weakness in other sectors like housing and non-tech manufacturing, while robust cash flows from major tech firms have maintained high business saving rates, preventing external imbalances.
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The AI boom is reshaping the U.S. economy, yet international accounts show a counterintuitive trend: despite sharp increases in imports of semiconductors, servers, and computing equipment, the U.S. current account deficit has remained largely unchanged. In a study published on October 14, 2026, New York Fed economist Julian di Giovanni explains the mechanism: the current account balance is dictated by the gap between domestic saving and investment spending, neither of which has shifted significantly in aggregate during the AI buildout.
Di Giovanni notes that a country can import substantial capital equipment without necessarily running a larger external deficit, provided it saves enough to pay for the investment. Data shows that since the acceleration of AI capex in 2023, gross domestic investment as a share of GDP has averaged around 21.5%, nearly identical to pre-pandemic levels. This implies that AI spending is not adding net new macroeconomic demand but reallocating resources within the economy. Specifically, increased investment in data centers and information-processing equipment has been offset by fading factory construction booms and softness in non-tech structures and residential investment.
Resilience on the saving side also plays a critical role. Unlike the dot-com era, today's AI buildout is concentrated among the most cash-generative firms. Di Giovanni observes that during the dot-com bubble, thin operating cash flows at young telecom and equipment producers led to falling business saving, which dragged down private saving. Currently, business sector saving has held steady at roughly 10.9% of GDP, above the dot-com trough of 8.8%, and there is no comparable surge in household consumption driven by equity wealth effects. Consequently, private saving has declined only marginally, insufficient to drive a significant widening of the current account deficit.