A “a rare strength in commercial real estate” is being fueled by the surge of data center construction in response to the “push to deploy” artificial intelligence (AI), according to the latest report on economic activity issued Wednesday by the Federal Reserve.
However, the agency said in its Beige Book for August, most of the 12 Federal Reserve Districts reported little or no change in economic activity since the prior report, for July, was issued. Four of the districts reported only modest growth, the Fed said.
Regarding the data centers, the Beige Book reported that district banks in Philadelphia, Cleveland, and Chicago reported the commercial real estate spurt. “Atlanta and Kansas City reported that data centers had increased energy demand in their Districts,” the Fed stated.
Despite that, however, the report is mostly downbeat in reporting economic activity. “Across Districts, contacts reported flat to declining consumer spending because, for many households, wages were failing to keep up with rising prices. Contacts frequently cited economic uncertainty and tariffs as negative factors,” according to the report.
In fact, the report stated, the New York district conveyed that “consumers were being squeezed by rising costs of insurance, utilities, and other expenses.”
“Overall, sentiment was mixed among the Districts,” the report stated. “Most firms either reported little to no change in optimism or expressed differing expectations about the direction of change from their contacts.”
The Beige Book is published eight times per year. Information it contains is based on anecdotal information collected by each of the Fed’s 12 district banks on current economic conditions in its district through reports from bank officials and interviews with key business contacts, economists, market experts, and other sources.
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