Tariff implications, persisting inflation woes and stalling rate cuts could bring an economic downturn in the coming year, Anirban Basu, chief economist for the Associated Builders and Contractors, said in a first quarter economic update and forecast on April 2.  

“I underestimated the U.S. economy’s resilience [in 2023 and 2024] and so I’m fearful of doing that again,” said Basu. “But from my perspective, inflation is poised to stay higher for longer, interest rates [will stay] higher for longer, many consumers are already exhausted financially, and asset prices are shaking.”

Total non-residential construction spending increased 42.2%, during the period between the start of the COVID-19 pandemic in February 2020 and February 2025, according to the U.S. Census Bureau. Manufacturing continues to lead due to the increase in public funding during the Biden Administration while the office and hotel markets were among the weakest.

In a poll, 50% of participants in an ABC webinar indicated that a shortage in skilled labor posed the most significant challenge for their companies currently. Two additional polls revealed that while many companies expect to maintain a healthy backlog in the coming year, a significantly higher number of participants predict a downturn in profit margins compared to the last time this poll was taken in December 2024. Of the disparity, Basu said, “My speculation here is that it’s tariffs, it’s materials, prices [and] expected inflation. Backlog is the same, but their delivery cost is such a concern, the margins are not going to be quite what they expected.”

“The economy is softening,” said Basu. “We’re not in recession territory yet, [but] there are risks.”