The stock market just keeps roaring ahead, as if the country and the global economic outlook were much more bullish than they are. A major reason is that investors remain bullish on artificial intelligence and the productivity gains it promises for American companies.
Meanwhile, if you look at our politics, one of the big flashpoints right now is grassroots hostility to the building of data centers. That is clearly animating economic populism among swing voters. Democratic Socialists, mainstream Democrats, and some populist Republicans have joined the chorus, and there are signs that the midterms will reward candidates for pushing this issue.
It’s a largely irrational moral panic that is almost certain to burn out before very long, in the way that the moral panic about fracking did. But that’s no consolation to anybody who loses an election over the issue, or to any company that finds its business plans thwarted. If the panic catches on broadly, it could also give the Chinese a decisive leg up on the United States in the AI race.
What I wonder is how these two things intersect. At some point, the market is apt to notice that the midterms are headed in a direction that will crack down on the very engines of AI growth that are sustaining high stock prices. That could end very badly.