Ticker: Large AI buildout poses latest inflation threat
The day’s business news at a glance
American consumers -- and the Federal Reserve -- are being hit with another high-cost headache. The gusher of investment in data centers -- likely topping $700 billion this year -- to power artificial intelligence has made memory chips, computer processors, and other equipment, as well as electricity more expensive, and economists expect it will continue to push up inflation at least through the end of this year.
While it won't be as large a spike as occurred in 2021-2023, when inflation peaked at 9.1%, massive AI spending is likely to keep prices rising more quickly than the Federal Reserve would like.
Regulators issue new guidance on lending risk
The Trump administration is cracking down on banks lending to people living in the U.S. illegally. On Monday, financial regulators planned to issue guidance reminding banks of their know-your-customer requirements. The move is part of President Donald Trump's executive order from May, urging banks to scrutinize customers' citizenship.
The guidance advises financial institutions to manage risks through sound underwriting practices. The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the National Credit Union Association are issuing the guidance. The administration has also reclassified certain tax credits as federal benefits, affecting some immigrant taxpayers.
Trump IRS suit filed for 'improper purpose'
A federal judge says President Donald Trump's lawsuit against the IRS over his leaked tax returns was filed for an "improper purpose" as she referred one of his attorneys for possible disciplinary action.
The ruling from U.S. District Judge Kathleen Williams on Monday amounts to a stinging rebuke of the Republican president's lawsuit, characterizing it as an exercise in self-dealing in which he sued an entity that is effectively under his control. The suit concluded in May with a settlement agreement that created a since-
abandoned $1.776 billion fund meant to compensate allies of the president, as well as immunity from tax audits.
Volkswagen CEO looks to avoid plant closures
Volkswagen's CEO has indicated that he's trying to avoid closing plants as he seeks to turn around the automaker's performance. The Wolfsburg, Germany-
based company faces pressure to cut costs at home and increasingly intense competition in the lucrative Chinese market, in particular.
Last week, Volkswagen said its "fundamental realignment" over the past three years had reached its next phase, announcing plans to streamline the model lineup by up to half. It didn't provide specifics, and questions remain over how else it will cut costs. There has been renewed speculation about the future of several plants in Germany. CEO Oliver Blume said in remarks published Sunday that "there are more intelligent solutions than closing plants."
EU chief weighs social media age restrictions
A top European Union official is calling for limits on children using social media. A special EU panel recommended on Monday restricting access for kids under 13 until tech companies prove their platforms are safe.
European Commission President Ursula von der Leyen expressed concerns about social media's impact on young brains. She suggested phased access for different age ranges, comparing it to age restrictions for driving or alcohol use. The panel's report emphasizes that the burden of proof for safety should be on social media platforms. It suggests other possible restrictions for children over 13. Von der Leyen's proposals carry significant influence within the 27-nation EU.