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In 2016, it seemed as though the United States was always marking time. Everyone was waiting to see which way the presidential election would go and the economy chugged along at 1.6 percent, according to a report by the U.S. Commerce Department. This was a slip from 2.6 percent in 2015—the worst performance since 2011. By contrast, 2017 has been a banner year for the stock market. Optimism over tax incentives and reduced regulation has fueled speculation and enticed money into the market.

The construction markets have continued to remain strong with double-digit growth in commercial buildings and increasing efficiencies from prefabrication and technology and automation, according to the Commerce Department’s U.S. Census Bureau. Government spending has slipped, which is not surprising for a Republican administration, except that this administration prominently touted a trillion dollars of infrastructure spending plan. Ironically, as President Trump’s relative position diminishes, Congress might take a stronger hand in leadership to lower corporate taxes and create some infrastructure investment.

However, legislation has not materialized and doesn’t seem likely before the end of 2017. Hence, state and municipal governments have pulled back on the issuance of government bonds and slowed their aggregate spending. Consequently, construction spending has dipped heading into the summer construction season, although above 2016’s pace. The rise of public private partnership (P3) projects over the past several years continue to accelerate, providing the funding for infrastructure projects when governments can’t or won’t tax the citizenry for funds. In many locations around the country, education spending continues to be a bright spot for the AEC industry as populations increase mandating additional facilities.

With the prominent exception of energy, which has suffered from a flat forward demand curve for electricity and low oil prices, according to a Bloomberg New Energy Finance report, which led to weakening investment. Design firms that serve the energy sector have been negatively impacted by these trends; the future remains unclear as nuclear power and coal continue their decline.

A bright spot in energy and other markets continues to be the environmental sector which is seeing increased investment both at home and overseas with a concern for clean water, hazardous waste remediation, energy efficiency and sustainability, according to a report by Environment Analyst. In an opposing point of view from many other parts of the engineering and construction industry, loosening regulations could negatively impact business and are causing some nervousness among executives.

Other private sector work continues to spurn growth throughout the economy with continuing demand for data centers, manufacturing plants and amusement/recreation facilities, which all increased more than 5 percent over the past year. Economic optimism has fueled the stock market and is driving construction growth, but political turmoil, rising wages and materials cost increases are threats on the horizon.

Global industry consolidation continues with many prominent acquisitions such as Jacobs acquiring CH2M ($3.7B), SNC Lavalin acquiring Adkins and AMEC being snatched up by the Wood Group. Before that, Lane Construction, the country’s largest highway firm, was swallowed by Salini Impregilo, and ever expanding AECOM (87,000 people strong) purchased Shimmick Construction in July. Firms seek scale, global reach and market diversification and the ability to direct investment resources efficiently.

The first half of 2017 seems to look like the good old days of construction are making a comeback. Next year may be better than 2017, especially if Congress delivers on infrastructure and taxes.

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