World Economy

Federal Reserve Reports Modest Growth as Data Center Demand Sustains Economy

U.S. economic activity expanded modestly over the past two months, buoyed by robust data center demand, according to the Federal Reserve's latest assessment. The central bank struck a cautiously optimistic tone despite mixed sentiment across sectors facing headwinds from volatile energy markets and geopolitical tensions. Private payroll growth slowed significantly in August, with companies adding 38,000 jobs—well below economist expectations of 47,000 and marking the smallest monthly gain since January. Energy prices have surged recently, reigniting inflation concerns heading into winter. However, Federal Reserve Bank of New York President John Williams said inflation continues its downward trajectory, with tariff impacts moderating and elevated energy costs not yet bleeding into broader services. The outlook remains positive but fragile, hinging on sustained data center investment and stable commodity prices.