Austan Goolsbee, a Federal Reserve official, has warned that AI data centre construction is “spilling out of its own lane” and lifting aggregate output beyond what the economy can absorb. He said he was “attuned” to elevated service-sector inflation and pointed to frequent supply shocks.
The warning comes as construction spending solely on data centres reached an annual rate of $85 billion in August.
That building spree is adding to inflation by increasing demand for computer chips, construction materials and skilled labour.
The pressure is evident in an industry that faced a shortage of roughly 439,000 workers as of late 2025. Average hourly earnings for electrical contractors rose 7.1% in August from a year earlier.
The shift is also changing which projects smaller contractors can pursue. Electrical contractors with 12 trucks who once competed for kitchen remodels now need greater bonding capacity and working-capital reserves to meet rigorous financial requirements for substation work.
For the Federal Reserve, the problem is that the AI-related investment boom appears largely resistant to higher interest rates, making inflation harder to curb.
Economists estimate that AI-related spending could exceed $10 trillion through 2032. If that spending continues to add to price pressures, it could force the Federal Reserve to raise rates further, putting disproportionate pressure on rate-sensitive sectors including housing and consumer credit.
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