On Dec. 11, 2024, Construction Executive presented its final economic webinar of the year. Hosted by Anirban Basu, ABC’s chief economist, “Construction Executive’s 2025 Construction Economic Forecast” revealed many things for contractors to be on the lookout for next year—and not all of them bad. Comparing poll results from Q3, as well as answering viewers’ top questions, Basu discussed the surprising performance of the 2024 construction economy and his equally surprising outlook for 2025.
POLL RESULTS
Which of these is the leading challenge for your company today?
Supply chain and/or materials issues
- Dec. 11: 6%
- Q3: 6%
Skills / worker shortage
- Dec. 11: 52%
- Q3: 59%
Insufficient demand for construction services
- Dec. 11: 15%
- Q3: 15%
Availability of financing for projects/project work
- Dec. 11: 19%
- Q3: 14%
None of the above
- Dec. 11: 6%
- Q3: 5%
Over the last three months, how has your company’s backlog fared?
It has risen considerably
- Dec. 11: 12%
- Q3: 16%
It has risen slightly
- Dec. 11: 27%
- Q3: 27%
It has remained about the same
- Dec. 11: 26%
- Q3: 28%
It has declined slightly
- Dec. 11: 27%
- Q3: 23%
It has declined considerably
- Dec. 11: 8%
- Q3: 6%
Where do you expect your company’s profit margins to be a year from now?
Substantially higher
- Dec. 11: 6%
- Q3: 3%
Slightly higher
- Dec. 11: 34%
- Q3: 34%
About the same
- Dec. 11: 34%
- Q3: 35%
Slightly lower
- Dec. 11: 22%
- Q3: 24%
Substantially lower
- Dec. 11: 5%
- Q3: 3%
QUOTES
- “This economy can still be characterized as quite strong thanks to its gross domestic product.” 0:08
- “We will enter 2025 with lots of momentum. For the year, the U.S. economy is expected to grow 2.8%.” 0:09
- “Exports turned out to be a source of growth.” 0:11
- “One of the major stories of 2024—inflation. And it’s stubborn!” 0:12
- He notes that the government was anticipating to enact six rate cuts in 2025. “Now maybe twice.”
- “Inflation is still meaningfully higher than that 2% federal reserve target (2.7% all goods).” 0:14
- “The number of construction job openings has shrunk [to just under half a million]. More people are indicating the [challenges of] availability of project financing and sufficient demand for projects—those are rising. 0:21
- “It is now less of a worker shortage and more of a skills shortage, but job openings are much higher than they were in 2016. It’s not that they are low, but they are not as elevated as they once were.” 0:23
- “Construction’s added nearly 700,000 jobs to the industry in five years.”
- “Construction employment growth for the 25 largest metro areas—like Detroit, Minneapolis, St. Louis—these are industrially oriented areas. That is a sign the supply chain coming back home.” 0:29
- “Unemployment rates are no longer that low—they are not extremely high but they’re higher than they were.” 0:32
- “We are going to enter 2025 with quite high interest rates.” 0:36
MAIN TAKEAWAYS
While he did address many questions relating to the workforce/skilled labor shortage, the outgoing administration (IIJA) and incoming administration (tariffs), Basu actually wasn’t insistent on the U.S. entering a recession anytime soon; in fact, he hardly mentioned recession at all. His overall outlook for the 2025 construction economy—while uncertain in some respects—is starting out positive.
For all the insights, view the full webinar here.
