A new report reveals that data centers are playing an increasingly central role in the economy, a development which is unlikely to curb the growing grassroots opposition to the facilities behind the artificial intelligence (AI) boom. This week, the Federal Reserve published its latest Beige Book, a report which compiles testimonies and interviews from business and community groups in the country. Published only eight times a year and timed for release ahead of the central bank’s interest rate meetings, the report is always closely watched for clues about the country’s economic direction.
And the latest edition revealed that while confidence in the overall economy remains mixed, data center demand and investment has become a key engine of growth. In its summary, the authors wrote that some of the 12 Federal Reserve Districts noted a “high concentration of activity related to data center projects” in recent weeks, and that demand for “data center-related orders” had boosted manufacturing activity across many of them. Meanwhile, the Chicago Fed reported that “data center and other mega-site construction projects remained the main centers of activity.” The report also quoted a contact saying that “without data centers, construction would be in a recession.” Analysts saw similar endorsements of the AI buildout in the latest jobs report from the Department of Labor, which significantly exceeded forecasts.
The Bureau of Labor Statistics (BLS) said that the economy added 162,000 jobs in August versus an expected gain of 56,000. And this surprise was attributed in part to data centers boosting activity in certain sectors. "Facilities and construction is one of the few categories still growing, driven in part by data-center development, where hiring demand is up 46 percent year to date." He added: “A few years ago, most people saw a data center as a technology project,” he added.
Facilities supporting cloud computing and AI require vast amounts of electricity and, in many cases, significant quantities of water for cooling. Critics have raised concerns about noise, pressure on power grids, rising utility bills and the environmental impact of meeting the industry's growing energy demands. Yet tech giants including Meta, Microsoft, Amazon and Google continue to build massive facilities to support AI development and cloud services.
Public skepticism has intensified as that buildout accelerates. A Gallup survey conducted in March found that seven in 10 Americans oppose building data centers in their communities, while separate Politico polling found 41 percent would oppose a facility within three miles of their home, up from 28 percent in January. And in a new Economist/YouGov poll, 51 percent of the 1,592 adults polled between August 28-31 said that constructing new data centers was “bad for the country.” Just 20 percent consider this expansion a positive, with the remainder either unsure or opting for neither good nor bad.
Meanwhile, President Donald Trump has remained a firm advocate of data center construction. It's bigger than the internet by many times. It's gonna be bigger than anybody ever thought possible.
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