June 8, 2026

The below transcript is a translation of the podcast audio that has been machine generated by Adobe Podcast.

Hi everyone. This is Taylor Saint-Germain with ITR Economics. Thanks so much for joining me on this episode of TrendsTalk. We at ITR are your apolitical and unbiased source of economic intelligence. Today I wanted to talk through data centers.

Let’s first start off with where we are. We look at a data series that is called US Private Data Center Construction. So I’m actually looking at the construction in terms of dollars of data centers being built. If you look at where we are today from a 12 month moving total. So twelve over the last twelve months in terms of data center construction, it is a $43.9 billion market. So we’ve invested $43.9 billion in data center construction over the last twelve months. That is a 30.8% year-over-year growth rate. Now, our forecasters anticipated that that was going to be the case, so shout out to our forecasting team.

We had forecasted about 30% growth by this time and we’re at 30.8%. So our forecast is right on track with what we would have anticipated out of this data center growth. So it’s clear to say, when we talk about this K-shaped recovery in the economy, that data centers are the upper part of that K with that 30% growth rate. Now the question is, are we in a data center bubble and where do we see data centers going forward? We do not believe we’re in a data center bubble here at ITR. Our forecasters do not believe we’re in a data center bubble. However, we do have the rate of growth for data centers continuing to slow down.

Now, I should put that in quotations because when I say “slow down”, we’re still talking about double digit growth over the next few years. Our forecast for 2026 is a 25% growth number in data centers. So that is saying 2026 we are going to see data center construction up 25% compared to the full year of 2025. That is a slowdown from the 30% growth rate today, but again, still double digit growth. By the time we finish 2027, we are expecting an 18.7% growth rate. In 2028, we are forecasting about a 9% growth rate. So we still have three consecutive years of growth in data centers as we move forward. But that pace of growth is clearly slowing down compared to some of the growth rates we’ve seen over the past few years. So I would not call that a data center bubble, because we expect the data center market to be $66 billion in 2028 compared to the $43 billion in 2026.

Now, I wanted to highlight, though, that data center construction is coming under a little bit of pressure, to say the least. For those of you paying attention to the media out there, the legislation in New York is voting on a potential moratorium of data center building, of data center permits in particular. Initially, the New York Legislature said they were proposing a three year moratorium on data center development. They have since scaled that back to a one year moratorium. So we are going to hear as this week progresses how that vote comes to fruition. The reason for that is we are running into an energy problem, and this is not new for us here at ITR, we’ve been sounding the alarm bells on this for quite some time. We have continued to see higher electricity prices as a result of this data center construction.

It is clear that our electricity infrastructure in terms of power transmission, distribution and generation, is behind in terms of being able to keep up with the demand for data centers. We covered this in our 2025 Executive Webinar that’s still out there for you to view, and many of our public speakers talk about this a lot as we’re traveling around the country, which is we have seen a much faster rate of increase in our cost of electricity since data centers have come into the market here in the United States. Now, I am not taking one side or the other in terms of supporting the moratorium or not supporting the moratorium, I leave the politics to all of you. But it is important to highlight that as it relates to this data center market, these types of bills, these types of legislation are starting to pop up.

And again, it’s not surprising to us. We are forecasting electricity prices to continue to accelerate and accelerate at a faster pace than really what we were used to throughout the last decade. I’m sort of removing the pandemic impact because prices, all over the board, really increased dramatically during the pandemic, post pandemic years I should say, ’21 and ’22 in particular. But this is going to be a challenge for the data centers. So right now, our forecast is calling for a slowing in the rate of growth of data centers. And we feel like that’s very much on track at this point in time. But a moratorium like that proposed in New York could have a downside effect on our forecast, and I want to be very clear about any risks that we have to our forecasts out there.

So when I think about where we are from a data center standpoint, we expect this record high to continue, we expect the rate of growth to slow relative to previous years, but there could be a more dramatic slowdown than we’re currently forecasting, depending on how some of this legislation is passed out there. So it’s really important that we’re paying attention to that as we move forward. We see data centers as a long-term growth area here in the US, and we see any business that’s supporting electric power transmission, distribution, generation, as a real opportunity, because we need that infrastructure for going to continue to build data centers. But these are important current events to pay attention to. I think many of you know, here at ITR, we do think there’s challenges that come along with this legislation. Anytime the government intervenes in markets, there can be positive benefits, there can be negative benefits. And in this case, we’re going to have to see how this plays out in New York, as New York is one of the first states that are really putting this type of legislation to a vote.

So there’s a lot to pay attention to in data centers, we’re still excited about the opportunity. We’re excited about the opportunities for businesses that support electricity infrastructure. But let’s keep an eye on how politics plays out, especially kicking things off with this vote here in New York. We have a lot of great data on data centers and these high technology markets, so please reach out to us if we can be useful in that regard. But for now, pay attention to the media, pay attention to that vote that’s coming down the line. We’ll know more as we move in the weeks to come here. Thanks for joining me on this episode of TrendsTalk. Please like and subscribe to TrendsTalk wherever you listen to your podcasts. Look forward to seeing you all in the next one. Thanks so much. Take care for now.