Source: The Wall Street Journal (paywall)
The massive capital expenditure required to build out data centers and train large language models is creating genuine supply constraints in electricity and semiconductors, with 81% of economists now believing this will materially push inflation higher over the next year. Unlike previous tech booms that were largely virtual, the AI buildout demands physical infrastructure—more grid capacity, more cooling systems, more rare materials—and this collision between unlimited demand and constrained supply is already showing up in regional power prices and software licensing costs. This is a real wedge between the Fed's inflation targets and the energy-intensive reality of how AI systems actually work.