State and local races could shape the pace of data-center construction
Analysts say local decisions on permits, reviews and power links may affect data-center investment more quickly than Congress can.
By Daniel Okafor · Business Editor
3 min read
Fortune reported that state local races data centers may be as consequential for the AI investment boom as the fight for Congress. The reason is practical: state and local officials can directly affect whether projects are approved, reviewed and connected to electricity supplies.
That gives lower-profile contests added importance as companies spend heavily on facilities needed for artificial-intelligence computing. JPMorgan estimated that AI-related investment accounted for about one-fifth of U.S. GDP growth over the preceding year, Fortune said, while ING analysts forecast it would make up one-third of 2026 growth.
How can state and local races affect data centers?
Michael Pearce, chief U.S. economist at Oxford Economics, told Fortune that state-capital and town-hall elections present a more immediate risk to data-center construction than decisions in Washington. Local governments can impose moratoriums, require environmental reviews or slow connections to the power grid, he said.
Federal policy can still influence the projects. Pearce said the Trump administration had already used regulations and executive orders to encourage construction, but added that broad legislation passed by Congress would take longer to produce results.
Pearce identified Texas, the Carolinas, Ohio, Illinois and Wisconsin as places where the midterm results could be particularly relevant to data-center development. He said an electoral record of candidates winning on opposition to data centers could elevate the issue in the 2028 presidential campaign.
A Virginia project shows the local leverage
Fortune pointed to Loudoun County, Virginia, where Amazon canceled a planned data-center project after reaching an agreement with local officials amid resident opposition. Amazon Web Services had bought the property in February for $427 million, according to the report.
Under the agreement described by Fortune, Amazon said it would not build data centers on the site and would instead use most of the land for mixed-use and residential development. The company also agreed to provide 25 acres for a community arts and recreation facility and contribute $5 million to a housing fund.
The example illustrates why local politics can alter the timing or location of individual developments, rather than establishing that election results will determine national economic growth. Thierry Wizman, Macquarie's global foreign-exchange and rates strategist, wrote that a state- and local-level Democratic sweep featuring candidates opposed to data centers could prompt a further stock-market decline; that was a market scenario, not a reported outcome.
Why any economic effect may take time
Pearce said a halt or slowdown in new construction would not immediately curb economic activity. In his estimate, much of a data center's economic value comes from the computing equipment installed after construction, and that spending typically follows construction by six to eight quarters.
Data-center construction rose sharply in the middle of the year, Pearce wrote. He therefore expected that wave of building to support business investment over the next couple of years even if governments later adopted moratoriums on new projects.
Developers may be able to reduce opposition by showing that projects can lower local tax bills or help pay for schools and roads, Pearce said. The midterms could shape the conditions for the next round of projects, while the current construction pipeline continues to feed later equipment spending.
This story draws on original reporting from Fortune.