???? This July 4th, Uncle Sam Knows Most American Businesses Are Not Using AI (After a Decade of Data Center Boom)

Today, we explore two new data sets from the Census Bureau on data center construction and AI enterprise applications. We love data and AI metrics without influencer hype, and the Census Bureau has done a fantastic job over the past few months. This data offers an unbiased look at enterprise behavior during a year of AI mania. We love the Census Bureau.

1. Data Center Spending Growth

The U.S. Census Bureau recently added (July 1st, 2024) data on data center construction over the past ten years. Our analysis reveals a remarkable 16x increase since January 2014, with spending rising from $1.6 billion per year to $27 billion per year in May 2024.

In comparison, here's the growth multiple of other private construction spending (in millions of dollars) since January 2014 (May 2024 adjusted annual spending / January 2014 adjusted annual spending):

• Total: 2.29x
• Residential (including improvements): 2.49x
• New single-family: 2.39x
• New multifamily: 3.03x
• Nonresidential: 2.07x
• Lodging: 1.50x
• Office: 2.31x
• General: 1.64x
• Data center: 16.6x

Data center construction has grown significantly more than other types of private construction spending.

• You can access the interactive graph here.
• Access the original data here.

2. AI Adaptation and Expected Use Across Sectors and States

On another note, the Business Trends and Outlook Survey (BTOS) conducted by the U.S. Census Bureau provides new, real-time estimates of AI adoption and usage among U.S. businesses. The survey began in September 2023 and covers a broad range of sectors and firm sizes. Here are some interesting highlights:

Survey Overview

• Start Date: The Business Trends and Outlook Survey (BTOS) began in September 2023.
• Sample Size: The survey covers approximately 1.2 million nonfarm, private employer businesses.
• Response Rate: On average, 16% of businesses respond biweekly, resulting in about 164,500 businesses for analysis.
• Coverage: The data is representative at national, state, and sector levels, including the 25 largest metropolitan statistical areas.

AI Adoption Trends

• Rising AI Use Rates: AI adoption increased from 3.7% in September 2023 to 5.4% in February 2024. AI use is expected to reach 6.6% by early Fall 2024, reflecting significant growth in AI integration.
• Sectoral Variation: The Information sector leads in AI adoption, with current use at 18.1% and expected to rise to 21.5%. Sectors like Construction and Agriculture have much lower AI adoption rates, at only 1.4%.
• Firm Size and Age: Larger firms (250+ employees) and younger firms show higher AI adoption rates. A U-shaped relationship exists between firm size and AI use, with both the smallest (1-4 employees) and the largest firms adopting AI more frequently than mid-sized firms.
• Employment-Weighted Data: A higher proportion of workers are employed in AI-using firms, particularly in large businesses and the Information sector, indicating that larger firms are more likely to integrate AI technologies.

Geographic Trends

• Highest AI Adoption: States with the highest AI adoption rates include Colorado, the District of Columbia, Florida, Utah, Nevada, and Delaware. Multi-state firms also show high AI adoption rates, reflecting their larger scale and resources.
• Lowest AI Adoption: States with the lowest AI adoption rates include Mississippi and West Virginia, indicating regional disparities in AI integration.

Applications of AI

• Common Applications: Businesses commonly use AI for marketing automation, virtual agents, natural language processing, data/text analytics, and speech/voice recognition. These technologies help automate tasks, enhance customer interactions, and analyze large datasets more effectively.

Future Trends and Organizational Changes

• Expected Increase in AI Use: Businesses anticipate increased use of AI in various applications, with significant growth expected in marketing automation, data analytics, virtual agents, and natural language processing.
• Organizational Changes:

• To accommodate AI, many firms are training staff, developing new workflows, and purchasing cloud services/storage.
• Despite the rise in AI use, few businesses report significant reductions in employment, suggesting that AI is often used to augment rather than replace human labor.

• Access the survey result here.
• You can access the full survey data dashboard (see AI Supplement) here.

?? Happy July 4th everyone!