Data centers now largest financial bet in U.S. history
The article examines the unprecedented scale of U.S. data center investment, estimating it could reach $10 trillion and nearly 4% of GDP. It also highlights concerns about energy and water costs, pressure on housing and other investment, and growing state efforts to reduce subsidies or pause approvals.
U.S. data center construction has become an investment boom larger than previous infrastructure expansions, according to economists and industry analysts cited by The Gazette. A Columbia Business School analysis estimates the buildout could involve $10 trillion in investment and account for nearly 4% of national economic output, while construction spending on data centers has risen as spending on housing and other projects has declined.
The rapid expansion, driven largely by artificial intelligence, is also raising concerns about profitability, employment and economic concentration. Economists Paul Krugman and Josh Bivens warned that data centers create relatively few long-term jobs and could leave the economy vulnerable if expected AI returns fail to materialize.
States and local governments are reconsidering incentives as data centers increase electricity and water demand. Nevada has reduced tax abatements and plans to require operators to cover related infrastructure costs, Virginia adopted a data center electricity surcharge, and Oregon continued a freeze on data center approvals after residents cited utility affordability concerns. Officials and analysts expect power demand to rise substantially as the buildout continues.