Federal Reserve Bank of Chicago President Austan Goolsbee has warned that Goolsbee AI aggregate overheating of the economy is a real and near-term risk, driven by surging demand for data centre construction across the United States.
Speaking exclusively to Fortune, Goolsbee said the data centre boom is crowding out spending in other sectors rather than lifting the whole economy. He described the expansion as “very hot, but largely shoving other parts of the economy down.”
“The rise has been stepping on others,” he said. “They’re competing for the resources. When I’m touring around the Seventh district, people are saying: ‘We’re having to scale back our plans because getting construction workers is too expensive, you can’t get HVAC.'”
That, Goolsbee said, implies a sector rebalance rather than a broader problem. But he added: “We’re not far from that turning into aggregate overheating.”
Data centre politics cloud Republican midterm hopes
The Goolsbee AI aggregate overheating warning lands as AI data centres have become politically toxic for Republican candidates ahead of the midterms.
A memo from the National Republican Senatorial Committee, described in the report as “leaked,” warned that data centres are “the anchor hanging around” Republican Jon Husted’s neck in the Ohio Senate race against Democrat Sherrod Brown.
“Brown has made his opposition to [data centres] the centrepiece of his campaign against Husted. Brown is using it because it works,” the memo said.
Pimco Head of Public Policy Libby Cantrill said the letter was likely leaked deliberately. “The politics of AI are getting worse,” she said. “In many ways, AI in general has become the new boogeyman, replacing China, on the campaign trail.”
President Donald Trump on Monday called communities opposed to data centres “backwards and poor.” Cantrill said searches for “midterm election” are already running at least 2.5 times higher in August than in any previous August since 2004, citing data from Bespoke Investment Group.
Capex surge boosting GDP, but Wells Fargo sees a peak ahead
The scale of AI spending is creating jobs and GDP growth that complicate the political picture. According to Pantheon Macroeconomics, without AI capital expenditure, the contribution of corporate investment to GDP would be roughly half its current level, wiping more than half a percentage point off GDP growth.
In S&P 500 sectors directly tied to AI, such as Information Technology, forward earnings projections are up 81.9% year on year, according to Ed Yardeni and Elias Griepentrog of Yardeni Research. That is more than double the 36.0% gain for the S&P 500 as a whole, they said.
Wells Fargo analyst Ohsung Kwon and his team believe peak AI capex growth will arrive in Q4 2026. The slowdown, they argue, follows increasing use of the word “moratorium” in news coverage related to AI. Even as growth slows, the sector would still be expanding as long as the rate stays above zero.
Goolsbee has not said when the Fed might act if aggregate overheating does materialise, but his comments signal the central bank is watching AI’s economic footprint closely.
