Imports and inventories are rising. Does that mean the economy is strong?

Imports and inventory levels are rising, according to new trade data that came out on Tuesday morning. The Bureau of Economic Analysis announced that imports of goods and service rose 3.4% between July and August, and the Logistics Manager’s Index number rose to 70.2 in September, up from 66.6 in August, meaning that inventory levels expanded.

Any rise in imports or inventory levels can indicate that the economy is strong, but who and what are fueling that demand matters, too.

One big category of goods where imports are rising is in the stuff that goes into building data centers.

“There’s a lot of extra materials, technology, and other electronics that need to be imported, particularly semiconductor chips, from abroad,” said Ben Ayers, senior economist at Nationwide.

That list also includes telecommunications gear, metals, and machinery. But Ayers says it’s not just AI that’s fueling demand for imports.

“Underneath that, we are still seeing a solid level of consumer demand,” he said. “The main message around consumer demand is resiliency.”

That resiliency is also one of the reasons inventories rose in September, according to Zac Rogers, a professor of supply chain management at Colorado State University who puts together the Logistics Manager’s Index.

Rogers said this is happening despite the fact that interest rates and tariffs are making inventories more expensive.

“Costs are high, but demand is high, too,” he said. “And so, high demand is allowing those high costs to continue.”

But Rogers said he’s also seeing signs that companies are uncomfortable making long-term bets on consumer demand.

“Warehousing and transportation capacity is not growing to keep up with inventory,” he said.

In other words, companies aren’t investing as much in new warehouses or buying new trucks, because they’re worried consumer demand might taper off.

“And so it doesn’t really, then, make sense to put a big investment in something like warehousing, if it might only just come online after the party is over,” Rogers said.

Still, Rogers also surveys companies that sell to other businesses — like manufacturers and wholesalers — and many of them said they’re planning to keep investing in inventories, likely because of that strong data center demand.

Meagan Schoenberger, senior economist at KPMG, said that AI investment is already starting to outshine consumer spending.

“GDP is increasingly driven by a narrow set of drivers,” she said. “Data centers are a very small portion of GDP.”

Schoenberger said that’s not necessarily a bad sign for the overall economy.

“It’s good for the economy to see this large investment,” she said. “The fact that it is a very narrow base for the economy is more of a risk.”

Because that investment could always slow down.