--- title: "Federal Reserve Says AI Data Center Buildout Is Making Everything More Expensive" description: "Federal Reserve Bank of Chicago president Austan Goolsbee told Semafor that AI-tied inflation is \"jumping out of its lane.\"" date: "2026-10-13" modified: "2026-10-13" authors: - name: "Victor Tangermann" job_title: "Senior Editor" link: "https://futurism.com/authors/victor.md" url: "https://futurism.com/artificial-intelligence/federal-reserve-ai-data-center-buildout-more-expensive" categories: - "Artificial Intelligence" - "Ethics" --- # Federal Reserve Says AI Data Center Buildout Is Making Everything More Expensive ![A photo illustration of a disintegrating dollar bill.]() *Shutterstock / Futurism* It's not just your electricity bill that [could be going up]() — it sounds like the massive boom in AI data centers is making practically *everything* more expensive. As the [*Washington Post* reports](), officials at the Federal Reserve are starting to sing a different tune after blaming president Donald Trump's tariff war on rising prices, admitting that the explosion in "AI-related investments" is contributing to inflationary pressures. That's on top of Trump's Iran war already sending the price of oil soaring. Federal Reserve Bank of Chicago president Austan Goolsbee [told *Semafor*]() that AI-tied inflation is "jumping out of its lane." "Prices are going up in spaces that are not just components in data centers and the directly adjacent industries," he said. "I’m getting increasingly nervous that that’s just straight, old-fashioned overheating demand." In economics, overheating occurs when aggregate demand outpaces productive capacity, leading to demand-side inflation, higher prices, and eventually reduced demand and consumption. In the worst case scenario, overheating can even [trigger a recession](). "It takes a long time for overheated demand to get going, and once it’s going, it’s hard to get rid of that," Goolsbee added. While the prices for groceries have yet to be directly impacted, economists are wondering whether it's only a matter of time. Worse yet, whether raising the interest rate, which makes borrowing more expensive and lowers consumer spending, will be able to meaningfully address rising inflation, is also starting to look less like a certain bet. The Fed raised interest rates in September, the first time in three years, as inflation proves tough to beat. Futures markets expect yet another increase later this month, [according to *Reuters*](). Meanwhile, the tens of billions of dollars being spent on AI data centers are starting to mask some fundamental problems plaguing the US economy, triggering fears over what it could look like if the AI bubble were to burst. Sectors that have already seen instant knock-on effects from the construction boom have been [consumer electronics]() becoming practically unaffordable, as well as a [major shortage in skilled labor available for housing projects](). According to Goolsbee, "it's clear what the Fed has to do" if inflation "remains persistent:" continue raising rates. But as tech companies show no signs of slowing down their extreme levels of spending, that lever may end up driving up the cost of investment — a reality that would make things tougher for AI companies as well. **More on AI data centers:** [*The AI Data Center Boom Is Causing a Gigantic Spike in Smog-Spewing Gas Power Plants*]() ## Author I've been at Futurism since 2017, where my role has evolved to encompass design, writing, and increasingly editing. I've always been fascinated by space exploration and advanced transportation, which I've leaned into by interviewing luminaries in those fields while closely following the dimensions of policy and regulation that allow next-generation projects to succeed -- or, sometimes, to fail. I'm also keenly interested in the effects of generative AI on society, policies, and democratic institutions, as well as clean energy, physics and biology, and the vagaries of tech leadership. My work for Futurism has been cited by publications including Ars Technica, Gizmodo, PC Magazine, Jalopnik, Fox News, and the New York Post. I spent my childhood living in locations including Manila, the Philippines, and Geneva, Switzerland, attended McGill University, and now live in Toronto, Canada. Before Futurism I worked at AskMen and a small photography studio. In my free time, I'm an avid gardener, foodie, and craft beer lover, as well as a maker of artisanal hot pepper sauces. I have a magnificent dog named Freida. ### Author social links [Bluesky]()