NewsmakersOctober 22, 2024

Larry Fink: Supercharge Economy Through Infrastructure, AI Investing

Speaking at SIFMA’s annual meeting, the BlackRock head suggested utilizing capital markets to grow the economy above the trend line.

Reported by Matt Toledo

BlackRock CEO Larry Fink, speaking at the Securities Industry and Financial Markets Association’s annual meeting on Monday, stressed the need for policy makers to address the federal deficit and $36 trillion national debt, pointing to the strength of U.S. capital markets as a way to improve the country’s fiscal woes.

“The economy is growing about 3%, but if you take out the excess spending of the federal government [$1.8 trillion deficit], that’s an equivalent of 6% GDP,” Fink said. “The growth is on the back of debt; the growth is not on the back of equity … we are going to have a [debt] crisis.”

One way to tackle the deficit, the CEO of the $11.5 trillion asset manager said, is to grow the economy above the trendline by investing in major projects like infrastructure and artificial intelligence.

Fink pointed out the billions that AI and data center projects cost, noting that these investments are opportunities for private capital to grow the economy.

“I’m not frightened of this deficit, but it’s pretty cautionary if we don’t find a way to unlock growth,” Fink said. “This is my message to every politician: We need to be unlocking growth from the private sector, and the U.S. is in the best position of any country in the world because of the scale of our capital markets.”

Fink says the way to unlock capitalism and achieve this growth is not to raise or lower taxes, but to make the capital markets more efficient, so that they can provide more funding for more segments of the economy.

Permitting reform is needed to clear a major hindrance to building needed infrastructure projects, Fink noted in his remarks: “The permitting process is inhibiting growth, inhibiting opportunity.”

Fink also pointed to the role that private credit can play in infrastructure investing.

“I think the biggest growth of private credit can be infrastructure credit,” Fink said. “I believe you’re going to see more and more opportunities in all the different shades of credit.”