St. Louis Fed says food, other costs rising but data center construction helping regional economy
A new Federal Reserve Bank of St. Louis report indicates that while food and electricity costs are rising in the region, data center construction is significantly boosting the local economy. Data center projects in areas like St. Louis and Festus have faced public opposition, notably leading to the ousting of half of the Festus City Council after approving a project by ClayCo CRG. The report also cautions that the economic benefits from data centers might be temporary.
The Federal Reserve Bank of St. Louis's latest Beige Book report highlights rising consumer costs, particularly for food and electricity, within its eighth district, which includes eastern Missouri, southern Illinois, Arkansas, and parts of Indiana, Kentucky, Mississippi, and Tennessee. Economist Charles Gascon noted challenges like supply chain shortages impacting energy infrastructure material prices, alongside high meat and poultry costs, leading consumers to make more intentional purchases and lower-income households experiencing cash flow issues.
Despite these economic pressures, the report indicates slight regional economic growth, largely attributed to robust data center construction and AI build-out. Developers have proposed about a dozen data center projects in the St. Louis area alone over the past year. Notable examples include a 120-megawatt facility in Midtown St. Louis, slated for completion by late 2028, and a hyperscale data center planned for Festus, Missouri.
However, these projects have faced significant public opposition. In Festus, the approval of ClayCo CRG's data center project led to the ousting of half of the City Council. While data centers are currently providing an economic boost, a 2025 Federal Reserve report cautioned that these benefits might be temporary. The report also touched on weaknesses in residential housing construction but noted a "very active" existing housing market. The St. Louis region did not experience the economic lift from the World Cup that Kansas City, Missouri, saw.