AI Powers Trump's Economic Boom, But Rising Public Concerns Threaten Political Payoff

Gerik

Summary:

As AI fuels record-breaking growth in the U.S. economy and equity markets under President Trump, a grassroots backlash is emerging over job displacement fears and surging electricity costs...

AI’s Dual Role: Economic Engine and Political Liability

Throughout his first year back in office, President Donald Trump has made artificial intelligence a cornerstone of his economic strategy and political messaging. Backed by surging tech sector investments and optimistic economic forecasts, Trump has signed executive orders to promote AI expansion and reduce regulatory barriers, including preempting state-level restrictions.

From the White House to Wall Street, AI is hailed as the growth catalyst driving over half of U.S. GDP gains in the first half of 2025. Massive capital expenditures from tech giants like Google, Meta, and Amazon are projected to exceed $500 billion in 2026. Markets have responded, with AI-linked stocks powering much of the S&P 500's gains this year.

Yet the very infrastructure enabling this boom data centers is now facing growing resistance from the American public. The tension mirrors earlier controversies surrounding globalization and automation: while AI promises long-term gains, many voters fear short-term losses in jobs, affordability, and environmental stability.

Backlash at the Local Level: Data Centers Meet Community Resistance

Local opposition to data center developments is mounting. Voters in multiple districts across Virginia, New Jersey, and Ohio recently expressed concern over the rising electricity bills, land use, and limited permanent job creation tied to AI infrastructure.

Data Center Watch reported that nearly $100 billion in planned investments faced delays or cancellations in Q2 2025 more than all previous quarters combined since 2023. The backlash reflects deeper anxieties about whether these projects truly benefit communities or merely burden them with higher utility costs and environmental risks.

In Lordstown, Ohio, a town that lost nearly 40% of its manufacturing jobs over the past two decades, a proposed $3.6 billion data center project has met fierce opposition. Despite developer promises of state tax revenue and high-paying construction jobs, residents and local officials are skeptical about the lasting benefits of a facility that will employ only 120 full-time workers post-completion.

Lordstown Council President Robert Bond summarized local concerns: “We don’t see the advantage tying up large industrial acreage for 120 jobs.”

Energy Inflation: Electricity Costs Become a Political Flashpoint

Electricity prices have emerged as a central issue in the AI debate. Power-intensive data centers are driving up regional energy demand, with some voters likening the affordability pressure to fuel prices a long-standing barometer of political satisfaction.

Trump administration insiders now admit that among Republican governors, there’s growing concern that AI infrastructure could trigger a broader utility cost backlash. Ohio Governor Mike DeWine remains optimistic, citing long-term economic spillovers, but the administration is expected to respond by fast-tracking a new executive order on expanding and modernizing the electric grid.

This planned order will focus on boosting transmission capacity and updating grid technology both crucial for managing AI’s future energy demands while keeping household costs stable.

Employment and Social Stability: Echoes of the Free Trade Debate

Beyond electricity bills, the public is increasingly worried about AI’s labor market implications. While AI firms argue that the technology will enhance worker productivity, many fear that automation will erase more jobs than it creates. These fears echo the economic displacement experienced during the offshoring and automation waves that once fueled populist sentiment the same populism that helped Trump rise to power.

Even within Trump’s base, voices like Steve Bannon are warning that AI could become the next elite-driven disruption to hit working Americans. On his “War Room” podcast, Bannon criticized tech firms for using worker productivity “until they get the robots and then they’ll toss you aside like trash.”

The administration has responded by expanding Department of Labor investments in workforce reskilling and infrastructure employment but the long lead times between training and benefits leave a political vulnerability heading into 2026.

Wall Street vs. Main Street: AI Bubble or Structural Growth?

There’s a growing divide between financial markets and public sentiment. Analysts widely agree that AI is responsible for the majority of stock market gains in 2025. However, some, including Oaktree Capital’s Howard Marks, have called the employment risks “terrifying” and are urging caution.

Investors are now factoring in political and regulatory risks, especially as delays in data center builds and state-level friction add cost and uncertainty. Meanwhile, the long U.S. government shutdown earlier this year has left economists without clear, timely data to assess how AI is reshaping productivity, inflation, and employment leaving markets and policymakers somewhat in the dark.

AI as a Political Wildcard Heading Into 2026

For Trump, AI is both a symbol of American technological dominance and a tool for economic growth. But politically, it’s becoming a liability if voters perceive its benefits as flowing to corporate elites while households face higher costs and uncertain job prospects.

Democrats, sensing opportunity, have begun crafting voter-friendly narratives focused on protecting communities from AI-related shocks. In the absence of a unified policy strategy from either party, AI is becoming a “political football,” as one Trump adviser put it with its future shaped not just by innovation or regulation, but by the 2026 election and the voices of communities trying to navigate a new economic reality.

The administration now faces a critical choice: double down on AI-led expansion without addressing public fears, or recalibrate the message and policy to ensure that voters don’t feel left behind by the very growth that’s fueling the markets.

Source: Bloomberg

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