How Data Centers Are Reshaping the US Economy
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.
Fed Report Shows Data Centers Driving 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.
“Data center” received 25 mentions across the entire report, mostly highlighting the lift these had given to the construction and manufacturing sectors.
“Demand for manufactured goods increased at a robust pace, driven by data center development and defense spending,” read a section on the Federal Reserve Bank of Cleveland.
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.
“Most of the labor market remains below last year’s hiring levels, but employers are still investing in a handful of areas they see as critical to future growth,” Ger Doyle, regional president for North America at the staffing firm ManpowerGroup, said in a note following the release. “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. “Today it’s equally a construction, facilities, security and operations project.”
Deborah Saneman, CEO at the payroll software firm Würk, said that the “technology’s rapid expansion with AI data centers is creating a major demand for skilled workers.”
Opposition to Data Centers Continues
Data centers have become a growing source of concern in communities across the country. 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.
“Whoever wins AI just wins. It’s that big. It’s bigger than the internet by many times. It’s gonna be bigger than anybody ever thought possible. Not even imaginable how big,” he told Punchbowl News in early August, while dismissing opposition to the “most incredible buildings” as mistaken.
In a post to Truth Social on Monday, the president said areas that oppose data center construction risk becoming “backwards and poor.”
“If they want to be successful and rich, with far lower taxes and jobs all over the place, let Data Reign,” he posted to Truth Social, adding that China “could not be happier with this anti Data Center movement.”
But this advocacy clashes with the caution expressed by some from within his own party.
“I guess I’m backwards and poor,” Representative Tim Burchett, a Tennessee Republican, told MeidasTouch in response to the president’s post.
Texas Governor Greg Abbott, who is up for reelection in November, said AI data center developers have largely brought public opposition upon themselves by failing to work with local communities before launching projects, arguing that the industry’s rapid expansion has fueled some anger across the Lone Star State and beyond.
Texas has become one of the nation’s leading destinations for data center construction, with projects spreading from major metropolitan areas to smaller communities.
Recently speaking on ABC News’ This Week, the Republican governor said many facilities appeared in communities with little public awareness or engagement, creating concerns about power consumption, water use, and neighborhood impacts.
“They basically dug their own grave for the problem that’s been caused for them and that’s why they got the backlash they deserve,” Abbott said, adding that Texas has paused approvals for new data centers while new statewide standards are implemented.
He said future projects in Texas will have to meet requirements related to water usage, electricity demand, consumer costs and local community approval before they can move forward.
According to a July 2026 tracker from the National Conference of State Legislatures (NCSL), states with active or recent efforts to restrict, pause or temporarily ban data center development include Delaware, Georgia, Michigan, New York, Pennsylvania, South Carolina, Vermont and Virginia. Several other states, including Minnesota, New Hampshire, Maryland, Oklahoma, South Dakota and Wisconsin, considered similar legislation that ultimately failed or stalled.
The most significant action came in New York, which became the first state to enact a statewide moratorium on large new data centers, pausing certain projects while officials study the impacts.
Contact Newsweek editors for this story: Daniel Orton and Anthony Murray.