Data centers drive US GDP growth – and electricity bills
A Harvard economist says investment in data centers drove the US GDP growth in the first half of 2025. However, these facilities may also be responsible for soaring electricity bills.
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A Harvard economist says investment in data centers drove the US GDP growth in the first half of 2025. However, these facilities may also be responsible for soaring electricity bills.
The calculations made by Harvard economist Jason Furman and shared on social network X suggest that investment in information processing equipment and software was responsible for 92% of US GDP growth in the first half of this year.
Investment in information processing equipment & software is 4% of GDP.
undefined Jason Furman (@jasonfurman) September 27, 2025
But it was responsible for 92% of GDP growth in the first half of this year.
GDP excluding these categories grew at a 0.1% annual rate in H1. pic.twitter.com/7p1eAI1aAa
This is despite investments in these data centers accounting for only 4% of the US GDP.
Major tech companies are racing to build data centers to meet the soaring energy demand of artificial intelligence (AI). There are currently more than 5,000 data centers in the US.
According to Furman's calculations, real US GDP growth was 0.1% annually without data centers.
GDP, short for gross domestic product, is a measure of the value added created through the production of goods and services in a country. While it is one of the most closely watched economic indicators, critics say it hides uneven wealth and income distribution.
GDP is also criticized for failing to account for environmental damage, which is increasingly linked to the rapid proliferation of data centers.
Data centers contributed to more than 105 million tons of CO2e emissions in 2023, representing 2.18% of total US emissions that year.
These huge facilities require vast amounts of water – mostly potable – for cooling equipment.
According to the Environmental and Energy Study Institute, large data centers can consume up to 5M gallons of water per day, the equivalent of the water use of a town with a population of 10,000 to 50,000 people.
Furman wrote on X that the artificial intelligence (AI) boom has likely driven up electricity prices.
Data centers use a significant amount of electricity, whose consumption is projected to increase from approximately 200 TWh in 2022 to nearly 260 TWh in 2026.
Utilities invest in infrastructure to keep up with soaring demand and spread those costs to all consumers.
Reuters reported that retail electricity prices across major US cities averaged 18.2 cents per kilowatt hour in the first half of 2025, which was 6.7% higher than the previous year.