The takeaway

Although data center construction and semiconductor purchases are both related to the AI boom, changes in their prices may be occurring at different stages of the investment process.

Producer price index

Our FRED graph above shows the producer price index for semiconductor and other electronic component manufacturing. This index measures prices received by domestic producers in that industry. For much of the recent past, the index had changed slowly, even during periods when semiconductor shortages received wide attention. But that pattern has changed: The index rose from 61.6 in January 2026 to 73.1 in May 2026, an increase of about 19% in four months.

A question of timing

Increased data center construction has been expected for some time. A study by Kalyani and Li (2026) finds that US business spending related to AI grew substantially in 2025: Information processing equipment, software, and data center construction accounted for one-third of total business investment in the third quarter of 2025, the highest share since 1947. In other words, the boom in AI-related capital spending appears to have materialized and is no longer merely expected. But if firms were already planning large investments in AI infrastructure, why would semiconductor prices rise only now?

One possibility is that data center construction and semiconductor demand may arrive at different points in the investment process. Early spending on data centers includes land, buildings, cooling systems, power connections, and other physical infrastructure—costs that aren’t measured by this semiconductor price index.

Semiconductor price pressures may appear later, when planned data centers are closer to being equipped and firms have a better sense of which inputs are scarce. At this stage, firms need processors, memory, networking equipment, power-management chips, and many other electronic components. Recent earnings reports from semiconductor firms suggest that AI data center demand has started to reach a wider set of chip producers and not only firms that make the most advanced AI processors.

This interpretation helps explain why semiconductor prices may not have moved much during earlier stages of the AI boom.

Also, supply bottlenecks and capacity constraints in the investment and construction process aren’t always obvious in advance. As projects move forward and orders become more concrete, firms can learn more about where supply can expand easily and where price pressures may emerge for specific components.

Inventories

A surge in expected demand doesn’t necessarily raise prices immediately if suppliers can increase production or if inventories are available. In fact, some semiconductor markets were working through excess inventories after the pandemic-era cycle. Once these inventories have fully normalized and data center orders have strengthened, the boom could begin to fully and clearly show up in the price index.

How this graph was created: Search FRED for “Producer Price Index by Industry: Semiconductor and Other Electronic Component Manufacturing.” Select the monthly, not seasonally adjusted series. The series ID is PCU33443344.

Suggested by Aakash Kalyani.

The takeaway

Expectations about personal finance conditions are at the heart of consumer confidence‚ and that confidence impacts spending, saving, and overall economic activity.

The Bankrate Consumer Survey

Our FRED graph above shows data from the Bankrate Consumer Survey, conducted annually each November or December. The survey asks US adults whether they expect their personal financial situation to be better, worse, or the same in the coming year. The graph shows two overall (or “net”) measures: the share who say better (solid blue line) and the share who say worse (dashed green line).

Between 2018 and 2025, the period when the data are available, the share of survey respondents expecting their finances to worsen grew from 12% to 32%. During those years, the share of survey respondents expecting their finances to improve shrank from 44% to 34%.

Bankrate weights the collected survey responses to reflect the broad makeup of the US adult population, and the pattern in forward-looking expectations described above complements what we discussed in a recent FRED Blog post about the perceived economic well-being of households reported through the Survey of Household Economics and Decisionmaking (SHED).

Put together, the Bankrate and SHED surveys help paint a picture of present conditions and future confidence about the state of personal finances and the overall economy. When current well-being is broadly positive but year-ahead optimism is tepid, the result may be more cautious spending and saving by households. Time will tell.

How this graph was created: Search FRED for and select “Bankrate Consumer Survey Poll: What is Your Personal Finance Outlook This Year? Better (Net).” Click on the “Edit Graph” button and select the “Add Line” tab to search for “Bankrate Consumer Survey Poll: What is Your Personal Finance Outlook This Year? Worse (Net).” Don’t forget to click on “Add data series.”

Suggested by Diego Mendez-Carbajo.

Every quarter, FOMC meeting participants submit their projections of the most likely outcomes for key economic indicators. The committee releases the Summary of Economic Projections (SEP) containing the median, central tendency, and range of their projections for the civilian unemployment rate, headline and core personal consumption expenditures (PCE) inflation rates, real GDP growth, and the appropriate federal funds rate. Projections are generally provided for the current year, the next two years, and the “longer run.” In this post, we examine the June SEP, which includes projections from 18 of the 19 members of the FOMC. It was the first release under the new Fed chair, Kevin Warsh, who did not submit projections. We use ALFRED to look at several recent projections for the unemployment rate, core PCE inflation, and real GDP growth, and the federal funds rate through 2028.

Our first ALFRED graph, above, shows the unemployment rate projections for the fourth quarters of 2026, 2027, and 2028 according to the past four SEP releases. Most recently, as shown by the gold bar, the median FOMC participant projects the unemployment rate will average 4.3% in Q4 2026 and Q4 2027 and then fall to 4.2% in Q4 2028. The 2027 and 2028 projections for the most recent release are the same as in the March release. These projections are consistent with a stable labor market near its longer-run unemployment rate.

Our second graph, above, contains the core inflation rate projections for the same years as the first graph. They show greater revisions than the unemployment projections. A noticeable change from the most recent projection is that Q4 2026 core inflation has been revised upward from 2.7% to 3.3%. This also is the case for Q4 2027, where it was revised upward from 2.2% in the March projection to 2.5% in June. This suggests the median FOMC participant sees near-term inflation remaining more persistent than previously expected.

Our third graph, above, shows the real GDP growth projections for the same years. The most recent projection showed a slight revision downward for Q4 2026 from 2.4% to 2.2%; but it was the same as the March projection for Q4 2027, at 2.3%. For 2028, there was a slight upward revision from 2.1% to 2.2%, but overall the median participant forecasts growth to be stable over the next few years.

Our final graph, above, shows the median participant’s projection of the federal funds rate. The most recent projection has been revised upward from 3.4% to 3.8% for Q4 2026. Upward revisions are also visible in the following years. The median participant now projects an average federal funds rate of 3.6% in Q4 2027 and 3.4% in Q4 2028. Notice that there’s no green bar for the December vintage. This is because the SEP projections for the federal funds rate were exactly the same as the September vintage projections. We’re able to see the March vintage in ALFRED because the 2025 vintages also included end-of-year values for 2025, which means there was a change in the data in March when the 2025 projections were no longer reported.

How these graphs were created: Search ALFRED for “FOMC unemployment” and take the median projection. Click on “Edit Graph,” choose a bar graph, and add four bars with the same series again. Finally, select the proper vintage for each bar. Change the dates to 2026-01-01 to 2028-01-01. For the other graphs, proceed similarly with “FOMC PCE core,” “FOMC GDP,” and “FOMC federal funds rate.”

Suggested by John Fuller and Charles Gascon.