The Outsider Perspective Issue 455 | The Beltway Outsiders

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Good Friday Morning! And thank you for joining me this week for the first edition of this newsletter, as I’ve become a full-time writer. I’ve been writing for a decade now, and this is the 455th version of this weekly newsletter I’ve written, going back to 2016. I unexpectedly went dark last week on columns and newsletters because I was shifting into a new job as Lead Content Creator at the Conservative Institute, as well as the In-House Counsel for the holding company.

What has happened? The American Almanac, for starters. We’ve seen explosive growth with that newsletter, and it has spawned several sister projects, including another coming online in the next few weeks. The feedback we’re getting from readers like you has been nothing short of effusive. This is the first week I’ve been full-time on these projects, and we’ve set site traffic records.

We aim to be something like a Morning Brew for conservatives, with a more digestible format. You’re getting the big stories of the day, while also everything I’m seeing that’s catching my interest. It turns out that’s a winning formula, which is why I’m shifting into that role full-time.

There are many other projects to come. If you haven’t signed up below, do so, and keep your eyes peeled. One of the reasons the Almanac has worked so well is that I got to cut my teeth in this space with this newsletter and readers like you. So thank you for reading, subscribing, and sharing my work. It means the world, and I’m forever grateful.

This week, I’m going to peek into the future and look at a topic I think will be a leading issue/topic for both the midterms and the 2028 elections – links to follow.

Quick Hits:

The American Almanac is growing! Hundreds of thousands of people now read us daily. I want to express my sincere gratitude to those of you who subscribe, share, and help us grow. You can subscribe here for free. Additionally, please check out Capital Digest (finance/economics) and Real Talk Digest. There are more projects in the pipeline. If you don’t see anything a day after signing up, check your spam folders.

Where you can find me this week

Please subscribe, rate, and review The Horse Race on YouTube — the reviews help listeners, and readers like you find me. Make sure to sign up for the Conservative Institute’s daily newsletter and The American Almanac.

Trump Is Right – It’s Time To Accept Reality On Ukraine – Conservative Institute

Democrats Miss The Crime Point – Again. – Conservative Institute

Trump Is Right To Rein In The Smithsonian – Conservative Institute

Artificial Intelligence – Real World Impact

The most important chart I’ve seen on artificial intelligence came in this week courtesy of Bloomberg and the Census Bureau. It’s a simple comparison between two commercial real estate trends: the dollars being spent on general office construction vs new data centers centered on artificial intelligence.

For the first time in history, at some point this year, the United States will be spending more money on building new data centers for AI than it will on commercial office space. The rapid shift started in 2023 (aka when ChatGPT went big), and has accelerated ever since.

Sam Bourgi writes for Investors Observer:

The future of commercial real estate in the United States is shifting away from traditional office space and toward data centers, reflecting both the rise of AI and the growing need for vast computing power to power it.

By June, U.S. spending on data centers had surpassed $40 billion, compared with $44.17 billion on general office space, according to Census Bureau Data.

For the first time, data center expenditures were on track to outpace office spending “in the coming months.” But the bigger story lies in the trend.

In 2021, data center construction was valued at under $10 billion, while office space exceeded $65 billion. Since then, the two categories have moved in opposite directions. Office spending has steadily declined, while data center investment has more than quadrupled.

In short, these data centers are exploding across the country. The massive AI models being deployed are seeing an enormous surge in use, and that is driving increasing demand to build more of these data centers. We’re talking beyond OpenAI on this: Elon Musk’s xAI (Grok), Anthropic (Claude), Llama (Meta), and more are all pouring billions into these centers.

Two weeks ago, I noted that electricity is one of the overriding issues for AI and these data centers. Americans are paying more on their electric bills every month, and these data centers are driving that cost. I was watching a segment on Bloomberg this week on a town in Virginia that is fighting to prevent a data center from being built in their backyard.

It’s a dual-edged sword. On the one hand, these localities get much-needed tax revenue from these data centers. On the other hand, these data centers are massive and drive incredible energy usage. The amount is mind-boggling. CNBC highlighted one developer that focuses on these sites:

Tract, for example, has assembled more than 23,000 acres of land for data center development across the U.S., with large holdings in Maricopa County, Arizona — home to Phoenix — and Storey County, Nevada, near Reno.

Tract recently bought almost 2,100 acres in Buckeye, Arizona with plans to develop the land into one of the largest data center campuses in the country. The privately-held company is working with utilities to secure up to 1.8 gigawatts of power for the site to support as many as 40 individual data centers.

For context, a data center campus with peak demand of one gigawatt is roughly equivalent to the average annual consumption of about 700,000 homes, or a city of around 1.8 million people, according to a CNBC analysis using data from the Department of Energy and Census Bureau.

For reference, I live in Tennessee, and Nashville is the largest city in this state. It has a population of around 730,000 people and has 315,000 households. And that one massive data center has more energy needs than all of Nashville combined.

It’s astonishing.

And more of these are being built. Remember, we’re on pace to pump more investment into these data centers than we are into commercial office space by the end of this year or early next year.

I’m not going to do a deep dive into this, but there’s potentially another significant technological advancement following behind AI: quantum computing. CNBC ran a report on how commercial real estate experts are starting to see that quantum computing companies are seeing a similar need for real estate space and energy. This tech is running 5-10 years behind AI, but it is following a similar pattern.

That brings us to the political impact and a peek into the future. Americans are seeing their energy prices go up. Specifically, residential electricity costs are skyrocketing. Gas prices are in check, but electric bills are not.

Virginia and New Jersey both hold elections this year, and electricity costs are hitting these races hard. Here’s one piece on the political anger:

New Jersey residents are up in arms over huge spikes in their energy costs, leading to speculation it could prove fatal for Democrats.

The New Jersey’s Board of Public Utilities (BPU) approved a 17-20 percent hike in June for the majority of households in The Garden State.

Republicans in the state have claimed it is tied directly to Democratic Governor Phil Murphy’s move to shut down the state’s nuclear and coal plants in 2017.

Murphy touted offshore turbines as the way forward, but none of them have yet to be completed due to issues around costs.

According to the Wall Street Journal, electric bills in the state now rank as the 12th highest in the nation, with prices 15 percent higher than the national average.

The outlet also reported the state is becoming increasingly depending on out-of-state generation to meet the electricity demand.

One resident who spoke with Fox News told the outlet of their horror and confusion over the price gouging.

One woman said: ‘$200 more, I know my electrical bill. I was shocked. So to say the least, I’m very disappointed.

For reference, New Jersey has 80 active data centers. Democrats in the New Jersey Senate are trying to force these data centers to eat more of the costs, along with demanding more environmental concessions. Republicans are demanding that Democrats build more nuclear plants to increase power generation.

Although the rate of electricity price increases differs from state to state, it is going up across the board. As I mentioned earlier, building a data center was a massive flashpoint in Virginia, where citizens are trying to block the building of one. The tax revenue from the data center would be an enormous boon to the city. Still, residents don’t want to pay electricity costs.

The mayor in the piece understood both sides, but also noted the obvious: electricity prices are going up everywhere. There’s no real stopping this explosion. I agree with his view. And if that’s the case, New Jersey and Virginia are the canaries in the coal mine.

When the midterms hit in 2026, with another year of increasing electricity costs under their belts, there will be no preventing more backlash. It will be the new inflation sore point. Whoever is in charge will be held responsible for the costs. On a federal level, that will be Trump and Republicans. On the state level, it’ll depend.

But rest assured, the backlash is coming. That’s your peek into the political future. AI is not just about chatbots, coding, and answering questions. AI has entered the real world.

Quick Hits:

Where you can find me this week

Artificial Intelligence – Real World Impact

Links of the week

X/Twitter Thread(s) of the week

Satire of the week

Thanks for reading!