Fed economists find AI boosts data center investment but has little effect on jobs and productivity so far

Economists at the Federal Reserve Board find that the AI boom has driven a sharp rise in data center investment but has had only small effects on jobs and productivity so far, in a research paper published on 12 November. The paper by Nick Carollo, Leland D. Crane, Daniel Garcia Molina and Joseph Nichols reviews current evidence on how AI investment and use are affecting the US economy.

The authors say investment in data centers, both the buildings and the chips and other equipment inside them, has climbed sharply on current and expected demand for AI services. AI adoption is growing quickly among consumers and companies, but most firms are not using AI intensively or at all. Companies that build AI models have grown so fast that they now make up a noticeable share of software industry output, and prices have risen in industries that supply data centers, such as memory chips.

Effects on the labor market "appear small and somewhat mixed," they write, and the recent pickup in productivity likely reflects factors that predate generative AI. The paper is staff research and does not represent the views of the Board.