Three revisions of the saving-investment balance have come back with the same sector doing the borrowing. A fourth has been requested.
WASHINGTON—Citing what officials described as an unresolved question of attribution, a nine-person White House office created to explain rising long-term yields in terms of the AI buildout has requested a fourth revision of its central chart, after the first three showed the federal budget deficit absorbing the bulk of national saving, according to two people familiar with the office’s work.
The theory the office was built on was addressed directly this week by Robin Brooks, a senior fellow in economic studies at the Brookings Institution. Working from quarterly data on the US saving-investment balance compiled by Haver Analytics, Brooks found that the deficit rather than corporate capital spending is what has driven long-term yields higher. He also noted that the competing explanation “is popular in Washington, DC, because it distracts from the other theory.”
“The assignment names the AI buildout,” said a senior official at the Office of Investment Attribution, who spoke on condition of anonymity because the office’s output has not been cleared for release. “Establishing what is actually raising yields would be a separate project, and nobody has commissioned that one.”
What the AI Buildout Was Supposed to Explain
The saving-investment balance is an accounting identity. It divides the current account balance into net saving by sector, and the sectors have to sum. Households, financial firms and non-financial corporations sit on the saving side in most periods. Government sits on the borrowing side, taking in that saving through its debt issuance.
The last comparable episode was the technology bubble of the early 2000s, when non-financial corporations swung from saving to borrowing and the capital spending of those years accounted for the entire current account deficit for a stretch. Nothing of that shape appears in the current series. Corporations were still net savers in the data through the first quarter.
The Chart the Office Received
The first version arrived on August 3, plotted on a quarterly series running back to 1990. Government borrowing dominated the page. Staff who reviewed it described the result as accurate and unusable.
“Nobody here disputes it,” a second official said. “It is a good chart. It answers a question that was never assigned to this office, and it answers it every single time.”
What the Office Has Asked For Since
Revision two moved the series to percent of GDP. Revision three applied a four-quarter moving average and dropped the pre-1995 quarters. Both came back with the same sector on the borrowing side, and the request now pending asks for the technology bubble years to be shown alongside the present period, described in the tasking language as useful context.
Marguerite Vandersloot, who spent nine years at the Bureau of Economic Analysis before joining the office in February as its senior attribution economist, delivered revision three on August 19 and attached a note to it the same afternoon. The note observes that the corporate bars do not cross the axis until capital spending on the AI buildout outruns corporate saving, a condition the series has not recorded since the technology bubble. She has been assigned the fourth.
Career staff have twice explained in writing that the sectors must sum to the current account balance, and that removing the government bars from the chart does not remove government borrowing from the economy. The second memorandum runs eleven pages and is titled “Notes on the Interpretive Flexibility of Closed Accounting Systems.” It concludes that there is none.
Where the AI Buildout Numbers Actually Sit
Capital spending on AI infrastructure is real and very large. Bond sales by the firms building it are on pace to roughly double this year, and Goldman Sachs projects that debt will fund more than a third of their AI spending by 2027. Those figures sit next to a federal debt that crossed $40 trillion this month against a Congressional Budget Office deficit projection of roughly $2.1 trillion for the fiscal year. Interest came to $963 billion over the first ten months of that year, about $200 billion more than the government spent on the military across the same stretch.
The president has directed federal agencies to speed permitting for data center construction. More Perfect Union reported this month that his financial disclosures show trades in at least 25 companies tied to data center construction or real estate leasing, with holdings in that group worth as much as $25 million at the end of last year. Newswax reported Wednesday on a market column that read the same analyst’s arithmetic backward.
The fourth chart is due Monday. Tasking documents reviewed by Newswax specify the period, the units, the moving average and the sector ordering, all of them carried over unchanged from revision three. The single new instruction concerns the color of the government bars.
Developing.
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