#MacroFriday: Boom in Infrastructure Spending Behind the AI Revolution

 

After last week’s research trip to Boston, where we focused on developments in automatization, robotics and of course AI, we dedicate this week’s MacroFriday to the remarkable surge in construction spending in US manufacturing related to this fields. 

Although reshoring manufacturing to U.S. soil might be the current talk of the town, these developments have actually been underway for several years. A stunning surge in construction spending in the manufacturing sector began in 2021. It comes as no surprise that a set of supportive government acts, the Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA), and the CHIPS and Science Act (CHIPS), with their tax incentives and credits helped trigger this boom. It is also worth noting that the figures in this graph are nominal, meaning we must take into account the significant rise in construction costs since 2021.

Most of this spending boom has been concentrated in the electronics and IT sector, where the CHIPS and Science act of 2022 provided strong stimulus to revitalize the American semiconductor sector. Although we have seen a decline in investments since the summer of 2024, it will be interesting to see how this trend evolves, especially given the growing importance of digital infrastructure. The recent wave of data center construction announcements by major technology companies points to a new phase in the industrial investment cycle. While the initial boom was driven primarily by semiconductor manufacturing, we may now be witnessing a broadening of the investment story toward the digital economy.