Our latest views on data, trends and events influencing the markets.
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The Federated Hermes Inflation Dashboard is a snapshot of US inflation. The dashboard’s indicators work together to create a more comprehensive picture of inflation’s trajectory along with comparisons to previous time periods.
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October 2025
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view dashboard
The Federated Hermes Inflation Dashboard is a snapshot of US inflation. The dashboard’s indicators work together to create a more comprehensive picture of inflation’s trajectory along with comparisons to previous time periods.
Inflation dashboard
ADDITIONAL RESOURCE
DOWNLOAD PDF
A scenario-focused look at what’s moving markets.
third QUARTER 2025
Quarterly Update
DOWNLOAD PDF
Featuring our latest forecasts and key capital markets trends.
DECember 2025
Monthly Update
The construction itself requires labor, but once they’re up and running, data centers are lean operations in terms of employment. This suggests the K-shaped economy could continue.
As regards water and power usage, data centers are heavy consumers. Roughly 4.4% of US electricity consumption in 2023 went towards their running, while a tremendous amount of water—the equivalent of thousands of households—is needed to cool just one typical facility.1
Unsurprisingly, this has prompted calls for designs that put less of a burden on freshwater supplies. There has been some movement in that direction, with megacap tech firms working to curb their water use by piloting zero-water-use designs. Power is the other major input, and at present the solutions are unclear. China is building out more and more electrical capacity, which should help keep power usage from constraining their AI plans.
In contrast, the US has been slow to build new nuclear plants and faces a 44-gigawatt shortfall in the next three years. As things stand, it’s not entirely clear where the power for the current data center build-out will come from. A mix of regulatory relief, ingenuity, and power plant construction is in order as the development of AI makes a modernization of the electrical grid necessary.
Our outlook:
Growth in AI goes hand-in-hand with growth in data centers. Given their lean operations, however, one should be realistic as to their potential to drive long-term economic growth. At some point could there be too many? Perhaps, but we’re not there yet. Instead, we expect data center capacity to rise broadly in line with AI, which we believe will flourish as part of our continued moderate growth scenario. The growth of data centers depends, however, on a commensurate increase in electricity generation.
For more on our scenario-led outlooks read our monthly and quarterly Capital Markets publications.
1Source: Library of Congress
Source: Providence Research 12/3/2025
The AI and cloud computing revolutions have made themselves manifest in investment returns, in innumerable changes large and small to daily life—and also in bricks and mortar. The architectural embodiment of AI is the data center. As the table below shows, data centers are projected to be a $1 trillion market in 2034. Construction of these facilities is big business right now, with new ones popping up all the time.
DECEMber 22, 2025
That windowless building runs the digital economy.
Data centers and the growth of AI
Our latest views on data, trends and events influencing the markets.
Capital Markets
Data Centers: a $1tn market by 2034?
Projected data center market size, 2025-2034 ($bn)