Data center backlash threatens U.S. AI investment and growth

Economists warn that intensifying political backlash against data centers threatens to reduce U.S. investment in artificial intelligence and slow economic growth, as these facilities have become a critical driver of national output. Federal Reserve researchers estimate data centers and related AI infrastructure accounted for roughly 20% of U.S. GDP over the past year, with hyperscaler spending projected to double to $800 billion in 2026. Analysts expect Democratic midterm wins to slow and raise costs of development, though projects underway will likely continue. Capital Economics warns sustained spending would require $2 trillion in AI revenue by the early 2030s, which seems unlikely, potentially easing construction and hurting growth. Reduced AI investment could also drag on GDP through weaker stock market wealth effects, with a 20% S&P 500 drop potentially cutting growth by 0.5%.