In the latest Construction Economic Update and Forecast webinar, expert economist Anirban Basu painted optimism over the current and future state of the construction economy under the effect of the Trump administration trade tariffs. The One Big Beautiful Bill is seemingly a positive, as well. In the meantime, however, contractors are experiencing an insufficient demand for their services as well as dwindling backlogs.
Review the polls, quotes and predictions below:
POLLS
Which of these is the leading challenge for your company today?
Supply chain and/or materials issues
Skills/worker shortage
Insufficient demand for construction services
Availability of financing for projects/project work
None of the above
July 2025
8%
52%
22%
13%
5%
April 2025
16%
50%
14%
12%
7%
Supply-chain issues seem to be plaguing the construction industry less and less, while an insufficient demand for construction services has overwhelmingly rose to the forefront.
Over the last three months, how has your company’s backlog fared?
It has risen considerably
It has risen slightly
It has remained about the same
It has declined slightly
It has declined considerably
July 2025
10%
23%
27%
29%
11%
April 2025
12%
26%
30%
26%
6%
There was no major statistical shift in any of the categories except for a remarkable increase of 5 percentage points who said it has declined considerably—a reflection of poll 1’s results which show a decrease in demand for construction services.
Where do you expect your company’s profit margins to be a year from now?
Substantially higher
Slightly higher
About the same
Slightly lower
Substantially lower
July 2025
2%
27%
34%
33%
3%
April 2025
3%
25%
37%
31%
4%
There is no major statistical shift between Q1 and Q2 concerning profit margin expectations.
QUOTES
“This issue with excess of office space is not simply an American phenomenon.” 6:29
“We bought a ton of imports during that first quarter and when imports go up, GDP goes down.” 8:45
“You look at the construction job openings through May and we did not see a major tilt up… What you see from the trend from mid-year last year is construction job openings have stopped falling.” 23:43
“Backlog can also grow for another reason, which is it’s taking longer for projects to be completed.” 42:25
“A rising fraction are now indicating they expect their profit margins to be a bit lower a year from now which speaks to these high interest rates, all this uncertainty facing project owners.” 57:00
“In June America ran a federal budget surplus of $27 billion, and that was because of a surge in tariff revenue. So yes, lots of nervousness right now but still I think a lot of lingering confidence the president eventually is going to engineer the economy in a very good direction and that’s going to be good for contractors.” 59:19
“Revenue generation is important to the president to tariffs are going to be much higher than they have been…The president really wants to see reshoring—more manufacturing companies coming to America—whether it’s ship building, steel, aluminum, copper mines, whatever it happens to be—and to have that reshoring you’ve got to persistently maintain high tariffs. So I think tariffs are here to stay.” 1:05:42
THE ONE BIG BEAUTIFUL BILL
“The one big beautiful bill does not do something that had been talked abut during the campaign…which was the reduction in the federal corporate tax rate from 21% to 15% but the OBBB restores 100% bonus depreciation as I understand it which is very good for contractors who are buying equipment for instance, but also for manufacturers that want to situate plants here, buy a lot of equipment, get 100% bonus depreciation, and then turn to contractors to build that next factory or foundry. So it’s good. And there are also some generous tax credits for people engaged in private research and development, which includes your technology sector…and that can be stimulating to construction as well so overall, I would say that the OBBB is stimulative to construction is promotes more construction. The cost cutting was mostly on things like Medicaid eligibility or accessibility, and there is some affect on construction from that especially in the healthcare space so it’s not all positive but overall, I think it is positive.
“By the way, if that bill had not been passed, we would have seen the expiration of the 2017 tax cuts and that would’ve cost this economy trillions of dollars, by-and-large, many construction firms would be delighted by the passage of the OBBB.” 1:07:58
BASU’S PREDICTIONS
- Inflation poised to make a comeback; blame tariffs
- Interest rates will be higher for longer
- Many consumers now exhausted financially and circumstances could worsen—because of tariffs
- Are asset prices overextended? This may have something to do with tariffs
- Forecast was for growth in 2025, but there are risks including rising interest rates and falling asset prices…because of tariffs.
SEE ALSO: THE AGE OF UNCERTAINTY: MONITORING CONSTRUCTION POLICY SHIFTS
