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Construction Outlook
The U.S. is the #1 economy at $31 trillion. The U.S. construction sector has a value between $2.3 and $2.7 trillion, making it by far the largest construction market in the world.
The outlook for U.S. construction over the next 2 or 3 quarters is promising but there are potential drawbacks in the Iran conflict, shortage of skilled trades, and the impact of tariffs. Compass International predict restrained growth of 2.3% to 2.7% over 2025. AI Data centers, Semiconductor/Microchip facilities, Pharma & Hi-Tech & Manufacturing, Power/Pipeline projects and Infrastructure projects will all be undertaken in 2026. Housing, commercial office, shopping malls, etc., will see a slight decline.
Tariffs
U.S. tariffs on imported materials remains an issue. Tariffs on steel, copper, aluminum, and other construction materials average 12.5% to 15%. Tariffs are still not fully implemented and are subject to negotiation and changes.
Labor
Of more than 300,000 U.S. baby boomers that retire each month, 10% to 20% are in the U.S. construction sector. If we don’t replace them, the current shortage of skilled workers will worsen and continue indefinitely.
Iran Conflict
The big question for the U.S. construction sector is how long the Iran conflict will last and will it drive up inflation in the next 3 to 6 months. Some analysts predict that the conflict could potentially drive oil prices as high as $200 a barrel. Others see a near term resolution with no sustained impact beyond the next few months. It is extremely difficult to forecast how long this conflict will last and the impact it will have on the global economy and the global construction sector. Economists currently forecast a minimal GDP reduction for most major countries.
The crisis has hurt Middle East and Asian economies such as UAE, Qatar, Kuwait, Japan, Thailand, Philippines and Indonesia. Some are working shorter workweeks. Natural gas prices are accelerating in some countries.
Aluminum production needs significant amounts of electrical energy and pricing reacts volatilely to increased oil prices. The U.S., as an exporter of energy products, is in far better shape than most countries.
Immediate Global Cost Impact to
Construction Materials in Q2 2026
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