Chicago Fed chief warns data-center boom could strain economy as inflation stays high

Chicago Fed President Austan Goolsbee told one outlet that the Federal Open Market Committee’s primary concern is inflation, which remains comfortably above the 2 % mandate because of supply-side shocks such as Middle-East oil disruptions and tariffs. While employment indicators like the unemployment and vacancy rates are stable, he attributes the economy’s resilience to widespread consumer spending, not to AI-related developments.

Goolsbee warned that the surge in AI data-center construction is “very hot,” diverting construction workers and HVAC supplies and potentially driving services inflation, which could lead to aggregate overheating. He noted that the all-items CPI fell 0.4 % in June and was flat in July, supporting a pause on further rate hikes. Contrasting optimistic AI forecasts from tech leaders Jensen Huang, Elon Musk and Mark Zuckerberg, Goolsbee cited the Solow productivity paradox and past over-hyped technologies as reasons for caution. He concluded that the greatest risk to continued stability is a slowdown in consumer spending, urging policymakers to refocus on traditional demand indicators.