Barkin Says AI Construction Is Adding Demand Pressure for the Fed

Richmond Fed President Thomas Barkin said spending on AI-related construction is surging, adding demand pressure that policymakers may need to curb if demand keeps surging.

Barkin said the Fed’s September meeting pointed toward a measured approach, giving officials time to assess conditions in the U.S. and abroad.

Consumer spending has not pulled back substantially, Barkin said. Hiring and layoffs have both been limited, and workers have kept their jobs as households adjust their spending.

He described the AI-related pressure as coming from demand rather than a supply shortfall, distinguishing it from energy price increases tied to the Iran war.

Officials will watch how long the pressure lasts, Barkin said. If demand continues to surge, policymakers may need to curb it; he previously described gradual rate adjustments as feasible.