Trump’s Factory Boom Isn’t What It Looks Like

President Donald Trump is seizing on a spike in construction jobs as proof that his push to lure factories back to the U.S. is working — and that an economic boom is on the horizon.

The cranes dotting American skylines tell a more complicated story.

Industry data show that much of the recent surge in construction jobs is tied to data centers and the power infrastructure that supports them, not a wave of new factories backed by fresh investment pledges Trump has secured. That matters because factories tend to employ far more people than data centers, one of the main reasons communities have been more receptive to the former setting up shop in their towns.

It’s a distinction that lands at a sensitive moment for the White House as the president and his Cabinet hit the road to sell the administration’s economic agenda ahead of the midterm elections.

Inflation remains elevated and housing construction has softened, but the administration has pointed to rising construction employment as one of the clearest signs that Trump’s trade and industrial policies are bearing fruit. In reality, many new manufacturing investments that Trump has helped secure are in early planning stages, meaning that the factory jobs that could reshape communities are likely years away.

“Not one in the last year has started under this administration where we’ve procured the first man hour of work. There's been a lot of announcements” of new manufacturing projects during the Trump administration, “but they haven't started yet,” said Sean McGarvey, president of the North America’s Building Trades Unions, which did not support Trump in the 2024 presidential election but noted in its statement congratulating him on his victory that many of its members did. “As far as actual shovels in the ground, that hasn’t happened.”

That hasn’t stopped Trump from repeatedly using construction jobs numbers to tout economic revitalization, as he did during Tuesday’s State of the Union address.

“As thousands of new businesses are forming and factories, plants and laboratories are being built, we have added 70,000 new construction jobs in just a very short period of time,” he said. “It’s getting bigger and bigger and stronger. Nobody can believe what they’re watching.”

The data, however, paint a more nuanced picture of which sectors are booming. Of the 33,000 construction job gains in January, more than 25,000 were in nonresidential specialty trades, the category that includes electrical and mechanical work tied to data centers and power infrastructure. Nonresidential building construction added 3,600 jobs. While both factories and data centers rely on a mix of building and specialty contractors, economists say the recent strength in specialty trades reflects the systems-heavy nature of data centers and power infrastructure projects.

And many economists believe those jobs were just a blip in the data, driven largely by unseasonably warm weather during the period when government statisticians were collecting data.

That disconnect could complicate Republicans’ argument to working-class voters looking for signs of a Trump-fueled factory comeback. Construction crews erecting data centers may signal investment but do not necessarily translate into the robust payrolls that anchor communities and reshape local economies in the way factories do, and polling shows that Americans are unsure whether data centers will be beneficial to their communities.

“Whether it's warehouses, data centers, manufacturing or a Buc-ee’s or whatever, what is ultimately going to bring stable, high-paying jobs into the community? From that perspective, manufacturing is the winner,” said Scott Paul, president of the Alliance for American Manufacturing. “At a data center, there are fewer jobs. There will be a few high-skilled jobs, but not a lot of them.”

“I think that’s a very fair question of, what’s going to get you more bang for the buck, employment wise?” Paul added.

What’s more, the unceasing demand for new data centers is crowding out other projects in America’s heartland — meaning it might take even longer for those manufacturing jobs to come to fruition. Electricians, HVAC technicians and other skilled workers are in short supply nationwide. Data center developers — backed by tech giants with deep access to credit markets — have been willing to pay premiums to secure crews and keep projects on schedule, industry economists say.

In regions experiencing heavy data center buildouts, that dynamic can delay or raise the cost of other industrial projects competing for the same labor pool.

“Nobody can hire an HVAC person because data centers are absorbing all the people [and] farmland,” Austan Goolsbee, a former economic adviser to President Barack Obama who’s now the president of the Federal Reserve Bank of Chicago, told reporters on Monday — describing a recent trip to Cedar Rapids, Iowa. “Massive demand of AI data centers is kind of overheating and overloading” the scarce resources that are available for other projects.

White House aides, however, argue that data centers and manufacturing aren’t mutually exclusive. The new manufacturing facilities being built, they add, are higher tech than those of the past, meaning the jump in specialty trade workers likely reflects more manufacturing construction growth than they might otherwise suggest.

“Multiple things can happen at once, and that includes data centers, that includes factories and such,” said one White House official, granted anonymity to discuss the administration’s thinking. “Construction jobs are coming in. The president’s said this in one shape or the other, but the leading indicators are all very solid, and the lagging indicator would be the manufacturing job growth.”

Still, manufacturing construction, which surged during the semiconductor and EV battery buildout of the past several years, has cooled from its peak, even as data center projects accelerate.

Much of the factory construction underway was seeded by incentives enacted before Trump returned to office, while many of the administration’s newly announced investments remain in early stages. Manufacturing construction spending reached a record high in mid-2024 and has since slipped by about 10 percent, according to Census Bureau data.

White House aides acknowledge that some of the new construction projects online were already in the works when Trump came into office, but say that the president has created a much more friendly regulatory environment and lowered cost burdens that have allowed them to move forward. They also attribute the decline in manufacturing spending to shutdowns in electric vehicle factories as a result of Republicans’ decision to end billions of dollars in Green New Deal subsidies.

“The stuff we’re looking at is things people were always buying like pharmaceuticals or semiconductors or things like that,” the White House official added.

Economists say the White House’s promised manufacturing boom from new investments may still materialize — just that it hasn’t yet shown up in the hard construction data.

“In the last year plus, we've observed a bit of a softening in construction manufacturing, but that could turn around,” said Anirban Basu, chief economist at Associated Builders and Contractors. “The Trump administration, of course, often highlights how many investors from abroad have decided to invest in America, and is it conceivable that more of that foreign direct investment will show up in the form of new manufacturing facilities or standard manufacturing facilities? That's possible. I don't see that yet in the data.”

Basu and other construction industry officials argue the president’s manufacturing renaissance is also being undercut by shifting tariff policies and his aggressive deportation agenda. Contractors report having projects under contract that owners are postponing for months at a time as they wait for clarity on trade rules and financing costs, with 1 in 4 contractors reporting delays or pauses because of policy uncertainty, according to a recent ABC survey.

Data center industry officials, however, argue that their boom is complementary to the manufacturing push — not at odds with it. They argue that the sectors are mutually reinforcing, with artificial intelligence infrastructure driving demand for domestic energy, equipment and advanced manufacturing.

“We are competing for workforce, I would say, to a certain degree,” said Cy McNeill, director of federal affairs for the Data Center Coalition. “But I think we all share the same goal of making sure that the U.S. workforce is ready for this growth in U.S. manufacturing and U.S. data center construction.”

Even the broader construction surge may prove more fragile than it appears, some economists caution. Housing construction has softened in recent months, and residential projects are expected to remain weak — potentially offsetting gains elsewhere.

“You're going to get some construction jobs because of data centers and build out of power capacity and maybe chip plants — that kind of thing,” said Mark Zandi, chief economist at Moody’s Analytics. “But that's going to be offset by job loss in the housing sector. Multifamily, single family completions are weak and are going to continue to fall. And they're much more worker intensive than the data centers.”