Geese are noisy and obnoxious. The proverbial golden goose (which wasn’t really golden but really pretty ordinary-looking) laid golden eggs, which made it popular with its owners, who it made rich — but it was still a goose. A honking, hissing, hard-to-get-along-with goose.
This is a column about data centers.
In Monday’s column, I looked at how President Donald Trump has become more outspoken in his advocacy of data centers and how that now puts him at odds with many of his rural supporters — including many in our part of Virginia, which painted itself red in the voting booth in each of Trump’s elections but now is getting red in the face about data centers.
In that first column, I dealt with the politics of Trump’s push for data centers. Today, I’ll deal with the economics. And he’s the one who brought up the goose.
Trump is right about artificial intelligence/data centers being the “golden goose”
Take a long, hard look at that heading because there aren’t many times that I write “Trump is right.”
In talking about data centers, Trump has warned on Truth Social that “if we kill the Golden Goose, you will only have yourselves to blame.” There is, indeed, lots of evidence from neutral observers that the investments in AI and data centers are driving the economy right now. ING Global Market Research, a Dutch financial multinational, issued a report this summer that concluded that AI now represents one-third of the U.S. economic growth in 2026.
That report said that the only thing driving construction growth right now is data centers. “Residential construction is being hampered by elevated mortgage rates and a general lack of affordability following the post-pandemic surge in residential property prices,” ING said. This raises an issue we’ll come back to, but for now, let’s move on.
An economic forecast issued recently by the University of Virginia’s Weldon Cooper Center for Public Service also highlighted AI’s role in the economy. “The national economy enters the middle of 2026 with growth and slightly stronger momentum than earlier in the year,” the report said. “The stronger outlook reflects increased artificial intelligence-related investment, particularly in information technology, software, and data centers.” In other words, the AI boom is helping to prop up a weak economy.
Trump has not exactly been a fan of Europe or academia, but that’s where two reports originate that essentially validate his argument that data centers (and their nexus to AI) are, indeed, “the golden goose.” This also raises the question of how much those who are pushing to either tax data centers more (such as state Sen. Louise Lucas, D-Portsmouth) or impose a moratorium on their construction (such as state Sen. Glen Sturtevant, R-Chesterfield County) are actually endangering Virginia’s sluggish economic growth if they wind up slowing down the sector that’s producing at least some economic growth.
Now come the caveats — which bring us to some of the reasons why data centers are now unpopular and Trump is on the back foot in trying to defend them.
The job benefits of data centers remain mixed
In Virginia, Loudoun County homeowners have certainly benefited from data centers because they have generated so much tax revenue that Loudoun has been able to cut its tax rates. Taxpayers in Mecklenburg County have certainly benefited because the tax revenue from the Microsoft data center complex there has helped build new schools. However, Virginians everywhere have seen their power bills rise, so we don’t have a full accounting of the costs and benefits. Not all those rate increases can be tied to data centers — Appalachian Power has hardly any data centers in its service territory, but rates have gone up there, too. Data centers may not be the only culprit, but they’re certainly prominent ones.
You may already sense where this is going: A few counties have benefited enormously from data center revenues, but people everywhere are paying higher electric bills. That’s a good point, but there are others.
The Weldon Cooper Center economists noted that while the AI/data center boom may be driving GDP growth, that growth appears to be going into profits, not wages. The point being: A lot of people aren’t seeing how they benefit from this and may be worried that AI will eventually eliminate their jobs. We’ve certainly seen a lot of dire warnings about what AI will do to jobs. However, João Ferreira, acting director of the Center for Economic and Policy Studies at the University of Virginia, said it’s too soon to tell yet what the actual impact is. Still, it’s fair to say that many people are fearful and skeptical, which gives them sufficient reason not to share Trump’s enthusiasm for AI and data centers.
Of note: A recent report in The Economist found that AI is actually creating more jobs than it eliminates: “The Economist estimates that AI has so far created around 1m new jobs in America. That easily exceeds the roughly 200,000 lay-offs attributed to AI since mid-2023, and appears more than enough to offset weaker hiring in many back-office roles.” This, of course, runs completely counter to the warnings that AI will eliminate more jobs than it creates. It seems fair to say that there is no consensus yet and that the available data is conflicting, although that Economist report bears watching. Its headline: “The AI jobs apocalypse is postponed. The AI jobs boom is here.” That may well be, but the catch is, like many job booms, the benefits aren’t evenly distributed.
The economic spin-off from data centers helps metro areas more than rural areas, new report says
Meanwhile, a recent Georgia Tech study on the economic impact of data centers found that the economic benefits of data centers to host communities are real — but also unevenly distributed. Not just unevenly distributed in the sense that communities with data centers collect more tax revenues than communities without, but unevenly distributed in the sense that some communities with data centers do better than others. More specifically, the study found that metro areas with data centers do better economically than rural areas with data centers — and that definitely becomes a relevant point as data centers push deeper into rural Virginia.
“We find that data center activation increases local employment by 3.5%, wages by 5.0%, and establishments by 4.7%,” the Georgia Tech report said. “These effects are economically meaningful and statistically robust, providing evidence that data centers do generate local economic benefits despite their relatively modest direct employment.” That sounds pretty good, right? It does, but then comes the catch: “However, the distribution of these benefits is highly uneven. Metropolitan counties capture the gains; non-metro counties experience negligible effects.”
How can this be? The Georgia Tech report says that’s because data centers in metro areas are often part of a larger tech-centered economy while those in rural areas aren’t. That means there are more spillover effects in terms of economic growth in metro areas than rural areas, the report says. Communities with multiple data centers also do better economically than those with a single, standalone facility, the researchers found, but there may be limits to how many data centers a rural area can accommodate. Or even a small metro, such as the Roanoke Valley, where even one complex — the Google data center coming to Botetourt County — has ignited concerns about the valley’s water supply. (Disclosure: Google is one of our donors, for our New River Valley expansion, but donors have no say in news decisions; see our policy. Or keep reading, because I suspect Google might not like some of this.)
That Georgia Tech report concluded that “the concentration of benefits in metropolitan areas complicates rural economic development strategies. Several states have targeted data centers as engines of rural revitalization, attracted by their land requirements and relatively modest labor needs. Our results suggest this strategy may be misguided: non-metro counties experience few spillover benefits from data center entry. Policymakers hoping to use data centers for rural development should temper expectations and consider whether alternative investments might generate larger local impacts.”
In more colloquial language, the Georgia Tech report found that, yes, data centers may be a golden goose in some metro areas, but they may not lay quite so many eggs in rural areas. On the other hand, many of the supply chain jobs for data centers are in rural areas, at least in Virginia. The Munters HVAC plant in Botetourt County has tripled employment and recently opened a new building to accommodate growth. The Hitachi plant in Halifax County is adding 825 jobs to build transformers. Those are two rural counties that very much have benefited from the data center supply chain.
Trump is right to be concerned about Chinese dominance in the AI sector. And he’s right that data centers generate a lot of tax revenues. But data centers alone will not make communities “successful and rich.” In Virginia, the localities with the most data centers were already successful and rich. On the other hand, income data does show that once Microsoft located in Mecklenburg County, median incomes rose faster there than in neighboring Halifax County. Of course, looking at the economic impact skips over the obvious trade-offs with water usage and energy demand, all of which have economic impacts, too.
That’s not to say rural localities shouldn’t pursue data centers; they do provide some jobs, and they do provide lots of tax revenues — and maybe that’s quite enough. However, the Georgia Tech study suggests that localities should temper their expectations. The question, though, is what happens if we freeze this industry entirely with a moratorium, as many are calling for. Those supply chain jobs in Botetourt County and Halifax County and elsewhere are all part of the golden goose, too. Stop one, and we stop the other. Until we decide, the honking continues.
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