The boom in artificial intelligence is changing investment priorities in the American economy. While data center construction costs are growing at a record pace, investment in other segments of private construction is declining. This is shown by an analysis by economist and financier Steve Ratner, prepared based on official data from the US Census Bureau.
Between December 2023 and July 2026, the annual rate of data center construction costs increased by $ 51 billion. Over the same period, spending on all other types of private construction combined fell by $120 billion.
Data is presented as seasonally adjusted annual construction spending rates, not as cumulative investment over the entire period.
Data centers are the exception to the market
The graph shows a sharp divergence between investment in AI infrastructure and other private construction.
In early 2024, construction spending outside of data centers is still growing. However, in 2025, the trend reverses, and in 2026, the decline accelerates significantly. In contrast, investment in data centers has continued to grow throughout most of the period.
The main driver is the growing demand for computing power to train and use artificial intelligence models. Technology companies are building new facilities that require significant investments in buildings, power supply, cooling and communication infrastructure.
Artificial intelligence competes with other investments
Nobel laureate in economics Paul Krugman warns of a possible crowding-out effect. According to this economic logic, the huge demand for capital from the AI industry could put pressure on interest rates and make financing more expensive for other sectors.
As a result, the construction of homes, offices, manufacturing plants and other sites could face stronger competition for financial resources.
A similar effect is also possible for the materials, equipment, electricity and skilled labor needed to implement large-scale construction projects.
However, the graph itself does not prove that data centers are the direct cause of the decline in other construction. Investment activity is also influenced by other factors, including high financing costs, the state of the real estate market and economic uncertainty.
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