Name: The Construction Economy Outlook Spring 2025
Uploaded: 2025-05-08T19:00:03.909Z
Duration: 1 h 29 min 25 s
Description: The Construction Economy Outlook Spring 2025

Transcript for "The Construction Economy Outlook Spring 2025": You on the East Coast and good morning to our friends out West. Welcome to the construction economy outlook spring twenty twenty five. The Economics Group at ConstructConnect is once again proud to present this edition of our Construction Economy Outlook webcast series in collaboration with the American Institute of Architects and the Associated General Contractors of America. My name is Paul Hart. I'm vice president for economic content here at ConstructConnect, and I'll be your moderator for the program today. Once again, we are very fortunate to host a panel of top experts on the North American construction economy. Here's what we're gonna cover in the next ninety minutes or so. We'll begin with Kermit Baker, Chief Economist at the American Institute of Architects. Kermit will review current challenges for the broader economy and construction in particular. He'll also walk us through the latest results from the AIA Deltek Architectural Billings Index, the ABI, and the AIA Consensus Forecast. Then Ken Simonson, Chief Economist at the Associated General Contractors of America will discuss current employment conditions, recent trends and construction inputs pricing, and as always, his near term and medium term outlook for the industry. Next, ConstructConnect's Vice President of Content Acquisition, Fonda Rosenfeldt, will explain the trends our reporting teams are observing in new projects and bidding projects in The U. S. And Canada. Then Michael Guckes, Chief Economist here at ConstructConnect, will present our latest construction starts forecast for The US and Canada. Michael will also walk us through the latest results for ConstructConnect's Project Stress Index. Following Michael, we'll have our panel answer questions from you, our audience. We had over 7,500 people, construction industry professionals, register to join us today and we've collected thousands of great questions. We've picked the best and we'll present those to our panelists. Now before we get started, can you guess what the number one most popular question we get asked every webcast? That's right. It's will the recording of this presentation and the accompanying slides be available? The answer is yes. Everyone who registered to attend, all of you those of you who are attending here will receive an email in the next twenty four hours with links to a recording of this webcast and the accompanying presentation slides. Please keep an eye out for that email. Check your spam, junk, or trash folder. If you're having any technical problems or need any assistance with viewing or hearing the presentations, please use the q and a panel on your webcast screen. We have a team of colleagues standing by to help, with any technical issues you may encounter. And we ask that you reserve that q and a feature for relevant questions for our panelists or the technical questions for our production teams. Also, on your webcast window, you will find that, a tab that says docs, DOCS. In that tab, you will find a link to five key resources to help you stay on top of the construction economy. And once again, we are proud to say that this webcast is registered with the American Institute of Architects for Continuing Professional Education. If you are a an AIA member and you submitted your AIA member ID number when you registered, the recording of your attendance will be submitted to the AIA, and they will take it from there. You will earn your 1.5 continuing education learning unit credits. Okay. Now it is time to put down your pens close the other windows on your browser, turn off the TV, lock the door, put the kids, back outside, and listen closely to our next four presenters on the screen for for the the next, well, less than ninety minute. We'll call it about eighty five minutes here. The level of authoritative insight from these experts will cannot be overstated. Our our first panelist is undeniably one of the leading experts in housing in America, having served as the project director for the remodeling futures program at the Joint Center for Housing Studies at Harvard University for twenty six years. Doctor Baker originated the AIA's work on the board survey, a monthly assessment of business conditions at architecture firms, and it's the source of the widely followed AIA Deltek Architectural Billings Index, the ABI. We're gonna talk about that a lot. If you don't follow the ABI, you're missing out. Get on a I a dot o r aia.org and, find the ABI so you can track that each month. And as if that is not enough, he's not his time isn't filled enough, Kermit also coordinates the AIA consensus forecast panel. So, Kermit, great to see you, but I'm gonna start with the question I have for you. Will we be seeing you in Boston next month at the American Institute of Architects conference? Hi, Bob. Paul, great to great to be here again at this event. Certainly, a lot going on. Yes, you will see me, at the American Institute of Architects conference in Boston, June Fourth To Seventh. A couple education sessions that, we'll be working on there. One is architects, and the economy. That's gonna be on June 4 from one to 02:30. Our head of research and our director of the ABI program will be talking about how architects use economic information to guide their decision making. I'll be leading a session called seven strategies of highly successful firms. That's going to be on June 5 from 07:30 to 08:30AM, bright and early. And then a couple sessions on the Export Floor in the Prosper Zone, housing trends shaping the economy, that's June 5 from 11:45 to 12:15. I'll be joined by Chris Herbert, the Director of the Joint Center for Housing Studies, on that discussion and then finally, thriving in this uncertain economy, June 6 from 01:30 to two. So a lot of business information that's not even getting into other presenters there. Michael Guckes is going to be at American Institute of Architects twenty five talking about economic trends. So it's all business, all the economy, all the time at American Institute of Architects twenty five this year. Let me jump into some of the trends that we're seeing here, Paul. And let me start with how the outlook for the economy has changed since the beginning of the year. So economic forecasters have become really more pessimistic regarding the outlook. Every quarter, The Wall Street Journal surveys a panel of highly regarded forecasters to get a sense of the outlook. In January, as you can see on that column of numbers, the forecasters were reasonably optimistic. The April survey was released just a few weeks ago in late April. And as you can see from those numbers, they have become more pessimistic. Rate of growth for the economy was cut below 1%. That perspective was really somewhat confirmed with the most recent GDP report for the first quarter, which showed the economy declining modestly. A lot of that had to do with horizon imports. So inflation expected to accelerate as we move through the year. Employment expected unemployment expected to pick up a bit. Anticipated weakness in the economy is expected to cause long term interest rates to ease just a little bit and probability of a recession over the next twelve months doubled from what this group predicted in January. So some pretty fundamental changes. I'm going to run through sort of what we see as some of the major threats to the economy that may be instigating this sort of pessimism in terms of what the outlook will be. One is an issue that's been with us for a while, and that's housing affordability with low production levels. This is likely to continue to be a problem moving forward. Again, not a new problem, but one one that does continue. Secondly, tariffs. They obviously have captured the most attention in terms of, what's going on in the economy. We're probably at or near what I would call peak tariff levels now as the Trump administration seems to be backing off their use of tariffs to achieve policy goals or at least at least stabilizing them to some extent. Third, immigration. Immigration policy has taken a bit of a backseat, with the focus on tariffs, but immigration policy is likely to pick up momentum given what we expect to be the pivot from tariffs moving forward. And then finally, federal cutbacks, they haven't been near the initial projections, but still enough to to slow the economy in the near term. So we'll see how those how those play out. Let's let's start with a a little discussion about tariffs. You know, they've been the greatest focus so far in terms of the policy from policy agendas I mentioned. Tariffs have been a bit of a moving target, regular changes in terms of what products are covered, what the tariff level will be for different countries and so forth. However, much of the focus has been on our three largest trading partners, Mexico, Canada and China. We're currently running trade deficits with all three, a fairly small one with Canada, somewhat larger one with Mexico and a giant one with China where we import more than three times as much as we export to them. And it's likely that China will continue to be the focus of future tariff battles, I do believe. What's the implication of that? What's the implication of this ongoing trade scuffle with China? Well, one is that tariffs currently are so high for many products that we import from China, that trend may come and, in fact, largely has come to a halt. And what does that cover? What do we import from China? Well, I've got some of the major product categories on the left hand side, the red bars there. Some of the major product categories are smartphones, computers, devices. However, there's also a lot of lower cost consumer goods. The New York Times recently reported that China currently makes almost one out of every three physical products in the world, and that's more than The U. S, Germany, Japan, South Korea and Britain combined. What do we export to China? Also at risk, and those are the blue bars on the right. Agricultural products, in particular, soybeans at the top of the list along with some high-tech equipment, crude oil, you know, exports, also likely to disappear with Chinese retaliating to tariffs as long as these tariff battles are continuing. How exposed is U. S. Construction sector to imports? Well, turns out about average for other industries. Wells Fargo has estimated that imports account for just under 9% of all industrial activity nationally, inputs to construction account for an estimated 10% of activity. Separately, NHB has estimated that imports account for about 7% of inputs to homebuilding nationally. However, the import share of of inputs to construction does vary considerably by type of construction. So, these are numbers from a Wells Fargo report using 2017 data, so a bit older. But it shows that imported inputs to construction are close to double the industry average for education and health care, basically institutional facilities, about 50% below the industry average for commercial facilities and about half the nonresidential building average for residential products. So likely to continue to see a fairly large variation in terms of the impact on various construction sectors. Next, immigration and the input on the construction labor force. The U. S. Construction industry has about 12,000,000 workers all in, counting self employed as well as payroll employees. About a quarter of these workers are foreign born. This year is even higher for the construction trades and higher in particular for some of the trades. About half of the foreign born construction workers are undocumented, so on average about one in eight construction workers in The US is undocumented and this is much higher for some trades and in some areas of the country than others. The construction industry, realize, as I said, very heavily on immigrants, so any fall off in immigration will exacerbate what is already a fairly serious labor shortage for the industry. So the consensus is that we need to add substantially to our labor force to handle current industry demands as we move through 2025. The current shortfall has asked me about a half a million workers by, the Associated General Contractors of America as well as the Associated General Contractors of America. NHB estimates the shortfall to be about three quarters of a million workers, so, significant by all of the estimates. Let's move on to what architects are seeing, in terms of business conditions. So billings at architecture firms have been soft since really the end of twenty twenty two, the fourth quarter of twenty twenty two, but became weaker and more volatile beginning around the third quarter of twenty twenty three. So we're about a year and a half into this more volatile, somewhat more negative phase. We haven't seen much of a pattern in recent months, modest decline some months, somewhat more of a decline in the next month as projects move ahead in fits and starts. The recent scores, really since the beginning of the year have been disappointing. First quarter ABI scores were the lowest since the pandemic. And in addition to billings at architecture firms, we also track two additional national indicators of future levels of design activity. The green teal line there is new design contracts. That's measures of new work coming into architecture firms. And those numbers have also been weak indicating that we're not seeing an improvement in new project work. So unlikely to see billings begin to accelerate anytime soon. And then final measure, the yellow line is inquiries, somewhat softer measure of potential future project work. They've been growing very slowly, suggesting there are some potential projects if business conditions were to improve. However, that also has has turned down recently the February and March numbers for inquiries. Our inquiries index were the first to show a decline in increase since the depths of this pandemic. So I'm not seeing any improvement really with any of the measures that we follow there. We also track ABI scores by firm specialization, multifamily residential, commercial industrial, institutional. We classify architecture firms by whether they get 50% or more of their billings from that sector, and 80% of architecture firms in our national panel do get 50% of their billings from one of these three sectors. All three of the firm specializations have you, as you can see, have been relatively soft recently. Multifamily residential was the first to see softer conditions that really began in 2023, still isn't showing signs of an impending recovery among firms specializing in that sector. Commercial industrial began to soften in early twenty twenty four, and still remains fairly weak. Institutional, specializations have held up the best, but as you can see, really not yet in full recovery mode. There's still some more progress to be made. Architecture firms back backlogs, provide a pretty good reading of current business conditions and the situation firms are in. So backlogs at architecture firms nationally are averaging about six point five months at present. And, fortunately, have been holding up quite well given this extended period of soft billings. We haven't seen much of a fall off in in in backlogs at firms. Backlogs for larger firms have been averaging about nine months, backlogs for smaller firms about three months. So we see a fair amount of variation around this average. Project delays, stalled projects, canceled projects that Michael will be talking about a little bit later have taken their toll on backlogs and weakness in new project works, does threaten to push backlogs even lower as we move through the year. And then now moving on to the outlook, one key indicator of future demand for design services is the commercial in the commercial sector is the trend that we're seeing in property values. So if values of existing properties are declining as they have been several years in the commercial sector, this typically is a disincentive for adding new space and does create a headwind for new construction activity. A firm called Real Capital Analytics tracks property values in this category, reports that the downturn, has largely stabilized across the major commercial categories. Apartments and offices have seen declines over the past year, but the one month and three month changes have been flat or even slowly increasing. The exception to the stabilization is manufacturing, a bit ironically since manufacturing has seen very, very strong gains in recent years. But it looks like those gains are beginning to flatten out a little bit and maybe that sector has peaked. What does the real estate industry see as the stronger sectors for 2025? Well, these are results from a recent survey of real estate investors. And the question was, this year, do you plan to increase your investments in this property type from 2024 levels, hold them steady or decrease your investments? And the figures here are the share planning to increase their investments for that property type minus the share planning to decrease their investments in this category. So it's sort of the net growth, if you will, or net decline. So data centers, probably no surprise, continued to be hot, soft a little bit recently, but still look to be one of the stronger sectors moving through the year. Healthcare, looks these investors are expecting a turnaround in multifamily residential as we move through the year. Offices, no surprise there, continued to be very weak. Some softening in hospitality and retail and industrial looks to remain about flat. And let me end up with the forecast. These are numbers from the American Institute of Architects (AIA) consensus construction forecast. We publish these numbers twice a year. They're compiled from the leading forecasting firms across the country. These numbers were released in mid January, so getting to be a bit aged and we'll be updating these numbers later this summer and publishing those in mid July. So what's their outlook at least as we are entering 2025? Well, we had a reasonably positive 2024 overall increase in spending about 6%, 7 %. Forecasters, you can see, are predicting a slowdown this year or next. Overall spending on non residential buildings is projected to increase just over 2% this year, not much better for 2026. So probably not even keeping pace with cost increases that they're seeing out there. Commercial sector is expected to be weak this year before increasing a bit as we move into 2026. Manufacturing, work in the pipeline even though not a lot of new work coming in or slowdown in new work. So slow growth this year followed by a comparable decline next year and then finally institutional work projected to perform the best, but still fairly modest gains by historical levels. So, you know, kind of kind of the best of of slow, performers, if you will, Paul, and and and back to you now. Review. I really appreciate it. Appreciate you being here, Kermit, and I'll, I'll see you next month. Folks, finding, hiring, retaining workers has been a challenge for construction, as long as I've been associated with this industry, well over a decade into but back to just after the great recession. And it seems really clear now that this issue is not going to fade away anytime soon. When faced with the possibility that our construction labor challenges may become significantly worse, I think you'd like to hear from the country's leading expert on that subject. Ken Simonson has served as chief economist for the Associated General Contractors of America since 2001. In addition to his work at Associated General Contractors of America (AGC), Ken advises the US Census Bureau on overhauling its construction data, and he is a fellow and past president of the National Association for Business Economics. He is also co director of the Tax Economists Forum. Ken, welcome to the program today. Thanks so much for taking time to join us today. A pleasure to be back with all of you, and I'm looking forward to giving you a quick run through on what's happening with the construction employment and wage trends, materials costs and different segments of the industry, what's happening with spending and then how the policy changes that Kermit has mentioned are likely to affect different segments of construction. Let's start with this chart on construction employment. The Bureau of Labor Statistics puts out figures on five segments of the industry as part of that national employment report that came out last Friday. And the figure you heard about, the headline number, is called total non farm payroll employment. That's shown here at the year over year change as shown here by the green line. The red line shows the change in employment in three segments, a nonresidential building contractor, specialty trade contractors and heavy and civil engineering construction firms. And the blue line puts together employment among home builders and multifamily general contractors along with specialty trade contractors, whether they're working on new homes or additions and renovations to existing homes. I think two things are notable about this. First, that all of the series are still growing, but clearly slowing. The latest figures show that from April of twenty twenty four to April of this year, construction employment overall grew at a 1.7% cliff. That was about a 50,000 additional workers. And nonresidential grew at a sharp 2.9% rate, and that was more than double the rate, for total non farm payroll employment. But even residential construction employment was holding up very well until just the last couple of months, and now it has flattened out, still, barely growing. We get more information about, what's happening with construction employment. About two weeks later, we get figures at the state and the metro level, and the Associated General Contractors of America (AGC) ranks all of the states by change in construction employment over the last month and last twelve months. So this figure this map shows that from March of last year to March of this year, 31 states added construction employees. Again, it's growing but slowing in terms of how widespread it is. In 2024, anywhere from 35 to 45 states were adding employees. And at the metro level, the show slowdown has been even greater. In March, there were just 53% of metro areas, including subdivisions of larger metros, added construction employees compared to March of twenty twenty four. Whereas that month, 68 percent ,two thirds of, metros had added employees. But one other measure of what's happening with employment comes from job openings and labor turnover survey. And I think three series in that survey are significant. On this chart, I've put together the, figures for March in each of the twenty five years in the history of the survey rather than tracking the year over year change, although you can infer that by the slope of the lines at the end. So hires as a percent of the total workforce in March of twenty twenty five was only 3.6. This is a gross figure. It doesn't, show the net change in employment. That's what comes out in the employment report. But what's notable about this is that the 2025 figure was lowest not just in, this line showing March and every year. It was actually the lowest percentage of current workforce hired in any month in the history of the series. Meanwhile, job openings as a percent of filled and open jobs has also been tailing off quite sharply over the last three years, including the last year. Openings advertised at the March was only 2.9% of the workforce. And while that's not a record low, it clearly shows that firms not only are not hiring now, they're not even looking to hire at the extent that they had been. So that suggests that, there's a big pause going on in current construction. But there's one other thing to note. Layoffs also have dropped to a near to a record low for March. And so that says to me that while firms aren't busy enough right now to be hiring or advertising jobs, they still expect a pickup in the near future, and that's why they're hanging on to the workers they have. Note that the two previous peaks in layoffs occurred, at the in the pandemic, at the beginning of the pandemic. March of twenty twenty is the all time high. And during the global financial crisis in February, there was another speak. There's a peak. And those spikes occurred in conjunction with big drops in hiring and and openings, unlike this time when the layoffs are holding at a low level, say, suggesting that companies still think that there will be more business in the near future. Well, how are firms able to hire at a greater rate than the overall economy? The answer is simple. They pay more. This figure comes from the, employment report. It has the unwieldy name of average hourly earnings for production and non supervisory employees. In construction, that means most craft workers plus office workers who aren't supervisors. And each of these lines has been trending upwards since the beginning of 2022. To take just one, the total construction figure compared to production workers in the broader non private sec in broader private sector went up from 16.6% premium. That is how much more firms in construction are paying production workers to come out and work on job sites than other firms outside of construction pay. That premium went from 16.6% to 18.8%. How much more are firms paying? Well, we can see that by looking at average hourly earnings for all employees. And, again, I'm tracking the year over year change just for construction. And that line that black line held steady at just about a 5% rate of increase until recently. In March, it dropped to a 3.9% rate. I haven't put the April number in here, but it was up to 4.5% again. We get two other sources of what's happening with wages. Associated General Contractors of America (AGC) is one of about 10 associations that supports the Construction Labor Research Council, which analyzes all union settlements. And they reported that last year, the first year settlement, averaged 4.7%. In fact, 15% of settlements had a first year increase of more than six and a half percent. And so that suggests that, wages this year are likely, the floor has been built in at least for union wages. Another source, PAS, is a firm for over forty years who surveyed companies in construction about what they pay their salaried and executive employees, and they also found that wages were going up, salaries going up at about a four and a half percent rate last year. So I think that number is pretty well baked in, for this year for both union and nonunion firms. Now the red line shows quite a different series, the producer price index for inputs to new nonresidential construction. That's a weighted average of the cost of all materials and some services such as design and trucking services that go into nonresidential construction. At the beginning of the pandemic, the economy shut down so much that prices actually dropped relative to the year before, and that's why the red line fell below that zero mark. But then we had record prices for lumber, steel, copper, diesel fuel, much more frequent and steeper than usual increases for many other materials. In fact, that producer price index was going up at a 20% rate for twelve straight months. After mid twenty twenty two, it tapered off and in much of 2023, was at or below the same level as in the same month of 2022. In the last few months though, we've started to see that line creep above the zero mark. The change, from February to March was four tenths of a percent. From January to February, zero point '6 percent, from December to January, zero point '8 percent. So I think we have definitely left the zero change level behind. And over the five plus years since February of twenty twenty, input costs for construction have gone up 40%, much more than the 24% that consumers have rightly complained about. In fact, for some materials, it's much more. Copper and brass mill shapes, that price has gone up 69%. For steel mill products, 54%. And for gypsum building materials, 52%. And these are based on prices that were collected around March 11 before the tariffs have taken effect. So the tariffs are likely to push these products up much more and the overall index for inputs up considerably at least on a onetime basis. Well, before I get into the tariff impacts, let me show you what's happened to construction spending. This comes from the Census Bureau on the first business day of each month. So a week ago, we saw figures for March that showed, again, growing but slowing whether you look at private residential construction shown by the blue line, private nonresidential shown by the red line or public construction shown by the green line. They're all growing currently at a 2% to 5% rate Compared to a year ago, the rate was between 7% and 13%. These figures are on the Census Bureau website, or on their press release. But on their website, under historical data, they show a lot more information, over 170 nonresidential categories. And I've put up, the nonresidential categories by the red bullet points here and subcategories, in some cases, in parentheses, all in descending order of March 2025 size. And the black ones show categories that had an increase in spending from a year ago, the red ones have decreased. And you can see that while overall there's that modest increase, total up 3%, private residential up 3%, nonresidential up 3%, mostly divided between private and public. When you go down the list of bullets, there's red sprinkled throughout. So it really is a period in which we're seeing a lot of the slowing and, in fact, negative changes for many subcomponents. Well, to go on to what the tariff impacts might be, this is a list of tariffs that were in effect or had been announced or expected as of last week. Just this morning, the president announced that we had reached some kind of agreement with The UK. The treasury secretary and The US Trade Representative are in, Switzerland, discussing or maybe actually negotiating something with China. So these figures may change. I'm not going to go into the details now, but the net effect is that construction is much more dependent on imported goods than many industries, and so tariffs will cause at least a one time bump in materials cost. But I think the more dangerous effect is what countries do in response to whatever level of tariffs winds up being in effect. That they're going to be either raising their own tariff barriers or non tariff barriers and keeping US made products out or else, their own citizens may stop coming to The US as we've already seen a big drop in Canadian visitors and early indications are the travel from Europe will drop off a lot. So many kinds of businesses that don't even depend on imported goods themselves may feel the effect of tariffs and cut back on much spending including construction. The other thing that, I think will really affect construction heavily is what happens on immigration policy. But, as Kermit mentioned, there are several risks to construction. Tariffs, immigration, expectation of larger deficits, keeping long term interest rates higher, that's a negative for fixed thirty year fixed mortgage rates, but also for municipal bond interest rates that finance a lot of public construction and for manufacturers, universities, and utilities that are issuing long term bonds. The administration has made big changes in the kinds of investments that it supports. Many, have not yet taken effect, but they're likely to shake up different categories of construction. There has been a cutback in federal regulations. Some have taken effect. Some, will have to work their way through the the regulatory process in reverse. But many projects really are affected much more by state and local regulation than federal, and that's not going to change automatically. So to sum up, I think single family construction will pick up gradually, but multifamily warehouse and office construction still headed down this year. They may flatten out by the end of the year, particularly multifamily. But warehouse is one of those categories very vulnerable to the cutback in imports. Office construction, mainly, mostly renovation, repurpose them, existing buildings, not new offices. The growth categories continue to be data center, power, although wind power is definitely being affected negatively by policy changes, and then within infrastructure, highways, airports, rail, but negative for transit construction. Manufacturing is still positive for the moment, but we're seeing a lot of projects scaled back, stretched out, and, even canceled outright. That's offset somewhat by, large manufacturers saying, oh, we're going to start building or we're going to increase building in The US as a result of tariffs that we want to avoid or because the tariffs are now creating more opportunity for us by protecting us from imports. But nevertheless, I think the risk is that manufacturing construction will also decline. Materials cost should be up to no more than 1% to 3% overall, although there will be big exceptions. And if we get these tariffs actually taking effect across the board and staying in place, we'll have at least a one time jump in that tariff level. And labor costs up 4% to 5%. However, there's a big risk there that labor costs will go up more because the industry depends very much on foreign born workers. This analysis from the Harvard Joint Center on Housing Studies of the 2023 Census American Community Survey found that for building envelope crafts, whether floor, wall, ceiling, or roof, that at least half the workers were foreign born. Not to say that they're illegal, but we had a case just last month in Washington state where a roofing company was raided by ICE and 37 workers were detained. That has a really chilling effect on workers showing up at visible job sites. Now the dependence on foreign workers varies a lot by state. Overall, The US economy, 18% of workers are foreign born. It's 34% in construction. And in some states, including California, Texas, New Jersey, Maryland, DC, it's 50% or more. But in others, it's as low as single digits. So it's a complicated outlook. One last thing to mention about, the immigration situation is that last year, point nine The US population grew by point 98%. That was the most in twenty three years. But 84% of that increase came from foreign, from immigration, net immigration. And 18 states would have lost population if not for that immigration. So, with immigration now having been almost completely shut off, perhaps negative on a net basis as people leave the country either voluntarily or through deportations, many states that had been growing may not grow. And that could have negative consequences, will have negative consequences, both for the supply of construction labor and demand for many types of projects. So on that rather downbeat note, I'll turn it back to Paul, but invite people to subscribe to the Data Digest, my weekly summary of economic news relevant to construction, by emailing me at ken.simonson@agc.org, and look at our new tariff resource center for the latest on what tariffs are in effect or threatened, for construction. So back to you, Paul. Thank you, Ken. That's great. I'm gonna make sure we get to a slide here. I wanna share with all. Weekly Data Digest report. But I highly recommend signing up for that, right after our webcast. They don't go there now. Wait until that. Write that down a g c dot o r g and go right after the webcast here in a little bit. For our contractors in the audience, Dave, if you're not a member, you can scan that QR code. Please visit a www.agc.org/why-join join. It's a great organization to be a part of. And now I'm sincerely delighted to welcome back to the construction economy outlook. My friend, Fonda Rosenfeldt. Fonda is our vice president of content acquisition. We have several hundred people and a sizable armada of technology at ConstructConnect that research and report on US and Canadian construction projects literally twenty four hours a day. And Fonda is the indomitable leader. I kinda wanted to throw admiral in there with the armada, but but she is our indomitable leader of that organization, and she has brought the latest insight from these teams, for us to review today. Fonda, thank you for joining us. Great to see you as always. Thank you, Paul. I I don't know if you said abominable or not, but I'm happy to be here regardless. I appreciate all of the insights shared today so far from our economists, Kermit Kermit and Ken, and I promise to do my best today to keep this interesting. So today, I'm going to walk you through some of the latest trends that we're seeing in our data for nonresidential construction. But before I delve into the data, I want to talk about where it actually comes from. ConstructConnect tracks nearly 500,000 projects per year. So the numbers that I will speak today reflect the hard work of our teams at ConstructConnect, and these stats aren't from AI or random databases. It is due to the hard work our content team does to curate these projects, validate these projects, and make sure that we have accurate data for the industry. So I want to thank our awesome content team, for doing their due diligence and putting pulling that together, But I would also like to thank everyone on this call who may be one of our sources, who pick up the phone and give us all of the content that we are looking for that's you owners and developers and engineers and architects, because without all of your feedback, these insights would not be possible. So a special thank you to everyone. So we're gonna go to the next slide, and we're gonna start looking at trends in bid activity. Can we go to the next slide, please? Okay. In The US, private sector bidding we're seeing is down about 3.8%. Public sector, however, is up 3.4%. And given given the percentage of the public versus private in the market, public is obviously a bigger portion of our projects. So what we're seeing is that the main drivers in pushing some of those numbers up are our civil, which is at up 8% over over last year at this time, and SMS, which is up 7%, versus last year over this time. And on the next slide, we're going to look at Canada. So in Canada, private bids are down 10.4% through April public and private bids are out down 6.5%. And the main drivers there are both the civil, general, and public data. They're all poor performing in the negatives versus the same period this year. We are, however, seeing increases, as I said, in the private and with their service maintenance and supply contracts. So next, if we can take a look at the planning data. US and Canada, we both collect information on thousands and thousands of projects each year. In the US, we're seeing overall that the total number of planning is down about 3.6%. That's due in part to a really large increase in private, which is up 15%. Makes a lot of sense because in the industry, you know, we catch a lot of CIP projects that have been proposed during the first parts of the year. So, certainly, you'll see a lot of those projects coming into play. Private planning, on the other hand, is down 12%, and we'll talk a little bit about what those projects are in the next couple of slides. But first, I wanna talk about Canada. In Canada, overall planning is very even versus last year. We're actually seeing a slight dip in private. It's about 14% and in public and a private increase of about 6%. So, again, private down, private up, planning planning for public is down. In the next slide. When we break these projects down by type, what we're seeing is that infrastructure and institutional work are growing. We see increases in bridges, pipelines, and water and sewer. Retail and office, you know, obviously, which tends to be more private, are down fairly dramatically as are industrial warehouses and hotels, hospitality. We're seeing a lot of planning in in multifamily, due in part now to some extended development and construction timelines that we're hearing about. Data centers, in particular, they're right now, as far as the planning is concerned, they're flat in Canada and down about 10% in The US. But this is following increases that we saw in the last couple of years, and we have quite a number of data centers that are scheduled to start this year. Due to the complexity of these projects, that range from access to resources such as electricity along with the special specialization of design and equipment, they give these projects very long development cycles. Private projects, on the other hand, that are like your retail, your hotels, your hospitality, your restaurants, are a little more speculative, and it seems like things are being approached a little more conservatively these days. And the next slide, please, to the mega megaprojects. So between the US and Canada, in the next twelve months, we are expecting that a hundred and $120 billion in bill a hundred and $20,000,000,000 in megaprojects projects are scheduled to begin. And a couple that I would just like to note, and one of them is a giant, I think the biggest, data center campus that's being planned, in The United States. It's being planned in Coweta County, Georgia. 17 Billion Dollars, 13 buildings, 800 acres. And from the time that I chose this project to talk about until now, I think it was, like, May 6, a moratorium was put out for for zoning, for a hundred and twenty a hundred and eighty days, because the leaders there in the county want wanna make sure that they have the proper zoning in place to support this project. And then in Canada, a $1,000,000,000 project is being planned by the federal government, and it is it's a basic big lab to explore sustainable development, clean energy solutions, and public health, basically bringing a lot of those agencies together in one place. So what is the big takeaway, from our data? Public spending right now is driving activity. Private work is cautious but growing. Megaprojects projects, will they be leading, you know, leading construction spend this year, with so many of them starting? Those are all all things to be seen. But once again, I want to thank our sources who are here, on the webcast. All of this is possible because you pick up the phone when our content team calls. Thank you for helping us bring all of this to you. That is it, Paul, a very quick look at what our data is telling us. So thank you for listening everybody, and, Paul, back to you. Thanks so much, Fonda. I appreciate you being here today. That was a great insight from our teams who were talking to, contractors, architects, engineers, developers, owners out there every day. Really appreciate that insight. Well, now it is time to welcome back to the webcast, ConstructConnect chief economist, Michael Guckes. Michael will be sharing our newly minted hot off the press construction starts forecast. This is the Q2 two update to our construction forecast that covers the remainder of this year and on out through 2029. However, I think we're gonna focus on the near term. Is that right, Michael? Think we're looking to the closer stuff. Yeah. And, the full forecast is gonna be released later this week. It's going live, and and Michael's giving us an exclusive preview. So I wanna remind everybody, Michael has been focused on construction manufacturing economics for his entire career. So shortly after joining ConstructConnect in 2022, he developed the project stress index. Michael, I think that was your first day. Right? I think it was the it may have been before lunch. You came over the course. The PSI is an early indicator of possible headwinds for The U. S. Construction market, and it's continued to grow in popularity and is now regularly covered in the media. So, Michael, please enlighten us, sir. Thank you so much, Paul, for that kind introduction. So, you know, what I would like to do today is just start top down as I often do if you've been part of one of my past presentations and I think it's just important to start with the macro outlook that we're using for our forecast. So if you'd if you like my forecast, if you like these macro figures, that's great. Then the rest of the of the slides will will make sense in our in our starts, forecast. If you think I'm too rosy or if you think I'm too pessimistic, you'll have to adjust, the the the future slides to taste. But what we're gonna do is basically just go through here real quickly, but what has happened with GDP? Well, at the beginning of this year, we were looking at closer to a two and a half percent GDP forecast. We've now cut that in half. We're now looking at a one, 1.2% GDP forecast for this year followed by a 1.6. So so two years of essentially, below long term trend growth. And you can see we're gonna have some other concerns as well when we look at population growth. Right? We see that population growth figure slow down. It doesn't contract here in The US. I think one of our previous speakers had mentioned that, I think it was Ken had mentioned just how important immigration is to population growth. And so we are are accounting for some of that in our growth statistics. And then you can see, of course, due to some of the volatility we have, this year due to tariffs, etcetera, we have increased our unemployment rate. And so we are we are pulling back our forecast due to a whole host of of big, driving issues. And so let's continue on then. Sorry. There's the button. When we look at Canada, it's a, not entirely different picture. Right? You can see a multiyear slowdown, though. So in 2025, we see less than 1% growth now. You then move into 2026 and while that number says negative point 2% for the year, most of that contraction actually occurs very early in 2026, and then we began a rebound. And you can see where that rebound takes us in 2027 and beyond. You're at 3%, on the rebound followed by about 2% growth thereafter. So that's pretty good. Population growth, similar story challenges with a a a very slow growing organic population, and and overall national population growth that is highly dependent on immigration just like it is here in The US. So that takes a bit of a of a downtick there. You can see in 2025 2026 and then only slowly rebounds in those out years. Unemployment rate here, does move significantly higher as opposed to our US outlook. And so you can see a much higher unemployment rate, seven and a half percent this year followed by 7% next year. So in a lot of ways, we are concerned about what will be happening at at the macroeconomic level for both The US and Canada. If we look at our construction data coming down the funnel and really focusing on high level construction, I have here, almost two charts in one. On the left side of this chart, what you're looking at is what happened as we move through 2024. And so all of these lines are representing year to date movements. In a sense, think of it as like a maturing of the data as we move through each independent calendar year. So early in 2024, we saw really strong growth. Right? Strong growth in civil. We saw really solid performance in residential growth. And then, you know, overall construction was right around 5% in part because total nonresidential building started off last year very weak. As we move through the year, you can see what happened. We had an erosion of civil construction and residential construction activity as we moved into the fourth quarter. Civil construction was the last pillar of strength, and as that started to, slow down a little bit there in the fourth quarter, it was simply unable to keep total, construction activity above the zero growth line. So we fell we ended that year ended last year down 1.5%. But then look at the vast difference this year. Right? All of our major, summary categories started off extremely low. You're looking at about down 15% for cons for civil construction at the start of this year, and then you were down right around 30% for both residential and nonresidential building construction. As we've now moved through March, so these numbers end here with with the March results, you can see things have improved only modestly. Right? We see that civil construction back up, just hit double digit growth once again year to date, but you can still see big challenges with nonresidential building and also residential, both of which are down more than 20% still through the first quarter of this year. And so that puts all construction total construction right now, year to date, is still down 13% compared to, the first quarter of twenty twenty four. So really starting off very slowly this year, and that really helped feed part of our forecast. This is our our total forecast for The US in blue up top and then Canada down below in red. And what you see here are are simply, you know, let me make sure I have my numbers right, but it's, I think, sorry, the numbers are very small. Down 1.8 this year for The United States, down significantly more, down over 8% for Canada this year. And then you move into 2026, which you see in 2026 is the beginnings of a rebound here in The US, but still more pain to come for Canada until you get into 2027 and beyond where you see 4% growth about at best. Right? So so you're you're ticking along fairly well. One of the things I would mention too is when we look at those distant numbers, you know, three, four percent growth, I always like to compare those to expected GDP growth. So, for example, if expected GDP growth in The US in those out years is gonna be about two, two and a half percent, and construction is growing at, say, four and a half percent, I think gives you a good sense of the fact that construction will be carrying its weight and more as, as the overall economy grows. Alright. So I have, two charts or two tables I'd like to share with you here. This one is Canada. So this is our twenty twenty five outlook, but here we've we've broken it up by subcategories. If you're familiar with our data, you know that we have almost two dozen subcategories that we track individually. And this gives you a sense of how the construction, environment or the landscape is so dynamic both in Canada and The US. And you can see here the top, two, four, six, seven, you know, eight, subcategories are expected to grow to some level. Of course, they're dominated by data centers, which is rolled into our private offices subcategory. And then you can see hospitals and clinics is, the second fastest expected category to grow this year. And then we have a series of civil related subcategories. Right? Things like water, power infrastructure, roads. Right? And then all of their civil. And so, the the reason why I show this is because I think it's very important for the construction leaders in Canada, as I'll tell also The US audience the exact same thing. We have to be very thoughtful about where we want to push our marketing efforts and our our our sales efforts, this year to come because some areas will be very difficult to find opportunities. Look at the bottom of this. Right? Manufacturing, amusement, transportation terminals. It's gonna be very difficult to try to grow business in areas where we expect large double digit declines. Same picture in The US. You can see here we have seven categories that we expect to grow to some degree or another, again, led by private offices and that is because of data centers, but then followed by a host of civil projects or sorry, civil categories and military. Right? So you can see bridges, roads, elementary and preschools, and again, power infrastructure as well. Again, though, there are a whole host of subcategories where where we do expect, many forms of of headwinds to come their way. Right? Looking at the very bottom colleges and universities, while our forecast does not have a component to it that looks at, government, largest towards, grants and and, college institutions and all that stuff. We do know, of course, from headlines in the news, right, that all of that is at jeopardy right now. That might actually make this forecast for colleges and universities even worse. But again, as I said with our Canadian leadership, right? It's very important to pick your subcategories carefully because it's going to be very hard to grow business in some areas that are expected to contract significantly. The other way to look at this is also by geography, right? And so I I do very much when I present like to talk about this. We need to to make sure that as business leaders, we're looking at the right combination of subcategories, but also geographies. Geography plays a critical part in all of this. And if I recall right, Ken Simonson graphics showed something very similar, which the West Coast and the Mountain States showed, greater slowdowns in, in construction, employment and and maybe construction activity. Our data shows a very similar picture where we see some challenging elements to the West Coast and the mountain regions. This chart in particular is overall, construction activity. When you look at civil and non residential building, especially the non residential building, which is available on our economic resources website, you will see just how much of a bifurcation there is as one moves from the West Coast to the East Coast. And in fact, one of the strongest areas that we're seeing right now and expect to, to make its way through the rest of this year is really that that East Coast and and Mid Atlantic region, the Mid Atlantic region being New York, Pennsylvania, New Jersey, and that immediately surrounding area. And then lastly, I have a similar chart, this one here or or graphic, but this is for Canada. And this is again just looking at total forecasted starts for 2025, and you can see here real challenges around Alberta. That's, you know, largely an energy story, right, with with low energy prices that's not going to help construction. British Columbia, Saskatchewan, Ontario, all, experiencing some level of contraction. Quebec does quite well in our modeling for this year. And then the Atlantic regions, which is a a host of of provinces here, listed, that's actually expected to do the the best by far. So just a few more slides here. This slide, I'm not going to spend a lot of time on. I think Ken did a great job of of breaking this down previously, but we can see what has happened with the cost of construction relative to bids. And really this tells us a story of margin compression. Right? So we saw, of course, during COVID, that orange line spikes up to over 30% because the cost of building accelerated so much faster than construction firms were able to increase their bids. They had to fulfill existing obligations and so that created a real margin problem. You can see in 2023 and 2024, there was some makeup for that where bid where bids were able to, big growth. Right? The the the size of bids, the the growth price of them, was able to exceed the falling, or the deceleration in construction costs. And then what we see right now is is almost parity. Right? We're we're very close to to a a time now where, bid, prices the increase in bids over time is pretty much just slightly above, the cost of construction. So things generally have slowed down, you know, but again, this is all backwards looking. This is is, you know, March of twenty twenty five looking backwards. So what may happen in the future, certainly is is going to be concerning to us. We'd certainly, as Ken and Kermit have both pointed out, you know, there's there's are very likely to be both material and wage pressures that could cause that orange line there to once again reaccelerate and exceed where the blue line is, which is again, you know, the growth in bid prices. And then lastly here, within our own data, I wanna point out the project stress index. So the way that this works is very simple. We're looking at a base year of 2021. So that is a level of a hundred. So all of the numbers that you see on this monthly composite when we release it, are giving you a sense of how much more or less stressful conditions are relative to 2021. And so this measure here, the latest measure, a 14.3 tells us that stress conditions are about 14% worse now than they were on average in 2021. And when we look at what is causing that, it's really this second wave of abandonment activity. And so, like last year, I I just wanna kinda give a little bit of a of a backstory to abandonment here. You can see in early twenty twenty four, we had a sharp but, brief spike in abandonments. And then it really took three to four months for that to come down and that was a story of of higher interest rates for longer. Right? Many in the commercial real estate space thought, hey, we will be able to, remortgage, refinance structures at a much lower interest rate by, you know, 2024, 2025 '20 '5. And, of course, when we saw that inflation was much more persistent and interest rates are going to stay higher, I think a lot of firms, a lot of owners and developers that has got cold feet and and we're really challenged to say, look, can I make this future project profitable under these sort of newer circumstances or this new realization of where future circumstances are going to be? I think what we're seeing now here in 2025 is a is a repeat. There's a there's now a reforming of ideas about what the future holds in store for us. Right? And a lot of that has to do with, recent, you know, political actions and and new directions being taken by this country and and the volatility that is being caused by tariffs and and a lack of control over cost. And this idea of of what really is capable with reshoring is creating a lot more disturbance. And we are seeing that in the data because we see private sector abandonments, much more concerned about this than our public sector data. Public sector abandonments are actually hardly changed at all. Although I should say when it comes to recent public sector data, we are seeing a much higher number of bid date delayed projects in the public sector, but we're seeing, as you can see here, a very high number of abandonments in the, in the contrasting private sector. So and then lastly, I will keep this exceedingly short because, our other speakers already did a great job. I think Ken said that there are, 30 he said 34% of construction labor is foreign born. I wrote it down. The number I had, and this is a little bit old, mine was 29%. With my number being a little bit older, I'm sure that that, you know, we're right around the same number. So about a third of all construction labor is foreign born. The one thing that my slide brings out that maybe the other ones didn't is just how, much more dependent construction is on foreign born labor than our peer industries. Right? So when you think about all the other major industries out there, things, whether it's, you know, professional and business services, leisure and hospitality, agriculture, construction is disproportionately more dependent on foreign labor than a lot of our peer industries. And what I just wanna remind everyone of is is that when it comes to the battle for labor and competing for labor, we not only are going to see a lot of intra competition. Right? Construction firms trying to steal from construction firms, quality labor, but we're also going to see a lot of outside demand for those same labors because there are just so many firms that will be desperate to find people, to do to do necessary jobs. And we saw that, of course, during COVID. Think about what happened with hotels and trying to find people to, you know, manage hotel operations, cleaning rooms, you know, doing food service, all those things. We could very easily see another surge or another, almost like a second round battle for, for labor. And then lastly, of course, as the other fellows mentioned, many of the laborers who will be impacted by, again, recent, you know, immigration policies, right? They are lower wage jobs. If the pressure on those low wage jobs increases, those higher wages at those lower tiers is going to have a ripple effect as you move up the chain from managers and other mid managers and leaders and whatnot. And so it could create a compounding issue with wage cost. That's it. Thank you everyone so much for the privilege of your time. So as always, really great insight. I hope everybody, enjoyed giving a look at our new forecast and and our, our, our our how we're saying the rest of the year is going to look for nonresidential construction. So, a couple of very quick items. I'm going to kind of blaze through the script here very quickly. The main point is I want everyone to, click on the docs tab there in your webcast user interface, your webcast window. There should be a tab. I believe it's up in the top right for most folks. It says docs, d o c. If you click on there, there's several links there. We have links to sign up for our economic reports. Those are free. This is not, you're not gonna be immediately hit over the head, to to purchase something. These are free reports that we publish every quarter, every month on the on the starts. And we also have a link in there for our economic resources page. That page is a hub to all of our economic content, all of our economic reporting. So that is a page that you want to bookmark to stay on top of what's going on in the construction economy. Also, we have a news page, the construction, economy news at ConstructConnect. Find that link there in docs on your webcast page bookmark that there are several articles published each day there with the latest news on the non residential construction industry. And lastly for me to share is our tariff toolkit. Not unlike the the the Associated General Contractors of America (AGC), tariff toolkit that that, Ken mentioned earlier, this is a tariff toolkit that helps you understand, as a contractor, as a manufacturer, manufacturer's representative, how, what the latest implicate what the latest news is and the implications there for your business, as we move through the rest of 2025. Okay. That was the ad lib really fast. Let's get out of that. And now, oh, yes. One last thing. We do wanna meet you. Take a look at this. We're going to be at, at Advancing Precon here, coming up shortly. There's our booth number. Please come see us. We'll, of course, be at American Institute of Architects (AIA). I believe that's Booth Number 1155. I see that the screen's very small for me, But make sure you come by and see us there. Michael will be speaking at that. We have several other ConstructConnect folks speaking at these events, so take note of that. And with that, I believe, yes, we are I am ready to introduce my colleague, Natasha Saladino. She is our senior integrated marketing manager, and she's back on the webcast to moderate the q and a with our panelist. Hi, Natalia. Great to see you. Paul. Great job to all of our speakers. Thank you all for joining us. So we're gonna go into the q and a section. So if I could have all my speakers join me on stage. Alright. Okay. So the first question that we have is for Ken. Are there any early signs that new tariff policies could have this same effect on supply chain delays as the pandemic did? If so, what are some proactive ways subcontractors can get ahead of it? I have to say, I haven't heard about supply chain delays yet from contractors, but that's probably because there was so much interest Can you hear me okay? Of tariffs that we had hello? Can you hear me yet? Okay. Alright. Let's try and move to the next one. So we have another question for Kermit. Are even shorter duration tariffs expected to have long term impacts? Well, thanks, Natasha. And, as as a good economist, let me let me give the answer to that question really on how companies react to the tariff at a change using your location of production, maybe bringing it back to The US, if if if you're relying on foreign production. You're probably gonna reconfigure your supply chain, in response to that. And if that tariff turns out to be of short duration, you know, once the changes have been set in motion, it's very difficult and it's very costly to reverse them. So I'll have a it'll have a pretty significant long term effect. I I think there's other companies that think, you know, gee, these tariffs probably aren't gonna be, in place for a long time, and maybe I'll just try to, tough it up and take a way to see attitude, to see wait and see approach to see how they do play out. And that's the case, probably won't have a dramatic long term effect. Hard to know what companies are falling into what categories so far, but I'm guessing given the, the frequency in in which Turo's policy has changed, I'm guessing more and more companies probably are gonna, try to wait it out and hope it doesn't have a dramatic long term impact on their operations. That's great, Kermit. Thank you so much. We have a question that came in for Michael. What key economic indicators will most influence the construction market in 2025? I think if we if we back that up a little bit, some of the the pillars of strength that we will be monitoring are simply things like employment. I know, Ken, I think, and and maybe both Kermit talked about that. But I think the the strength of the consumer is gonna be very, very important for the health of the economy this year. So we're definitely watching what happens with employment. And then the other thing is we just wanna continue to watch inflation and any kind of construction demand as well. There would be a concern, of course, that rising prices could result in a reduction in the quantity of products consumed. And so that kind of demand, destruction is also something we're very concerned about. That's great. Thank you so much, Michael. Fonda, we have a question for you if you wanna come off mute. What are the most consistent ways to generate new leads in construction? I would say ConstructConnect. We have a a wait. We have a down path where our I'm sorry. I'm getting some feedback here. I hope you're hearing me okay. We hear you, Fonda. Okay. Yeah. Our we have a team of content specialists that regularly go after construction leads and qualify those leads with the key stakeholders. And I would say aside from that, really focusing on relationship building in the industry, even if it's a project that you can't get involved with today, it certainly could lead to opportunities in the future. That's a great answer, and I have a follow-up to that. So that's a good point. But then what is so what is the best way in your opinion to find partnerships to grow my business? Again, it's really just it's looking for gaps in whatever your business has and really looking for those partners that can fill those gaps as well as, you know, working together with building product manufacturers and and subcontractors to get those trusted lines of communication open. Awesome. Thank you, Fonda. We have another question for Ken that came in. The question is, what are the potential impacts from tariffs on projects awarded but that have not yet started? Well, I hope my mic is working now. I do expect, to see, much higher costs hitting, many construction firms on projects that they've already, provided a fixed bid for. I think going forward, construction firms are being much more cautious about preparing bids that they're putting in bigger contingencies. They are being more selective about what projects they're going to bid unless the owner shows some willingness to share that risk of being hit with the tariff costs. So I think this is yet another thing that may slow down construction activity for the next few months until there's more certainty on behalf of both contractors and owners. Great. Thank you so much, Ken. We had another question come in for Kermit. The question is, how is the current economic climate expected to affect public and private construction investments? Well, thanks, Natasha. Generally, the rule of thumb is that private construction is more impacted by economic conditions, economic cycles and public construction, reliant on public reliant on money that isn't quite as vulnerable to economic trends. I think we may see some different patterns this time. As I showed in my presentation, institutional construction is more reliant on products that are imported than commercial or residential construction, so that's one change. Secondly, federal cutbacks, we haven't talked a lot about that, but a lot of the cutbacks are focused on projects related to health care and education, some of the key institutional categories. Your private construction, more interest rate sensitive. The economic weakness may take some pressure off of interest rates. So again, kind of tilting a little more towards, you know, public construction being impacted this time. However, you know, one one one final caveat, I think, is, you know, kind of the condition of the overall economy. If we really do head into a recession, then I think private construction is certainly gonna feel the brunt of that. Well, I have a a question that comes off of that one. Given current uncertainties, Kermit, could there be an economic slowdown like we saw in 2008? I'm I'm nervous about making comparisons, Natasha, to 2008. I think the fundamentals were very different. We had a very overheated economy in 2008, if you remember, on the housing side in particular. You could get a mortgage that you couldn't fundamentally support with your income that they kind of the theory was things were going up so quickly that, you weren't going to be banks weren't going to be held holding the problem after the fact. This cycle is is very much, I think I'd call it, self inflicted. I mean, it's not a fundamental imbalance in what's going on in the economy. It's just federal policy that that is slowing things down. Since it is manufactured, I think it could be turned off much more quickly. I think if we cut back on tariffs, cut back on aggressive immigration enforcement, the economy would calm down pretty significantly. So I think there are more, more opportunities to kinda slow down this economic cycle than there were in 2008. That's great. Thank you so much, Kermit. I think we have time for one more question. The last question came in for Michael. The question is, what can you tell us about megaprojects projects in 2025? Right. So when we look at the projects that are still to bid this year, we see a lot of opportunity in industrial and also public sector projects. Very much in line with what our starts forecast showed, roads, bridges, water treatment, etcetera. We've seen some great airport projects already this year. So those are the areas where we're where we are excited about. Other areas that we're also excited about when it comes to megaprojects are data centers. Again, transportation terminals, multi residential and mixed use buildings. We've seen some megaprojects in those areas. And then, once again, industrial in general, but specifically power plants. That's great, Michael. Thank you so much. We had so many great questions coming in. We hope we were able to answer one of your questions today. I'm gonna invite Paul back on stage for final thoughts and a wrap up. Thanks, everyone. But, I I bet we can do it. Let's ask for final thoughts. Fonda, I'm gonna start with you. Final thoughts for today? 60 oh, and the rule is sorry. I'm gonna still look at the rule, sixty seconds or less. Sixty seconds or less. Uncertainty, in the economy. So many factors that we've never dealt with before. So it's going to be an interesting year. Fantastic. Kermit, your final thoughts? Oh, Kermit, you're muted. Sorry. Sorry about that, Paul. No worries. I was going to reinforce what Fonda said about uncertainty. I think, you know, it depends on how aggressive the administration is going to be on carrying through with some of the tariff and immigration policies that they've lined up or if they will back off once they see that the economy is not responding, well. But I think it's going to be a challenging year for construction overall. Thanks, Kermit. Michael, your final thoughts for today? Sure. Well, in light of what both Fonda and Kermit said, my response has been very consistent, which is have a labor strategy. While things are volatile now, they will not be volatile forever. And, yeah, one of the challenges that will still be there long after this, you know, period of time whether there there's a recession or not will be the struggle to find qualified labor. So having long term plans and having a really strong strategy around labor would continue to be my, my chief, you know, concern. Great. Thank you, Michael. And, Ken, we're giving you the last word today, sir. What are your final thoughts? Well, I think I'll add two things that I didn't cover before. First of all, in addition to tariffs, there's a proposal for a tariff like fee on Chinese built or operated ships calling on US ports. And, this could be very steep. And if so, it's likely to be passed on to, the, shippers of each container or each item that is loaded into a bulk carrier. So it's yet another way construction may be hit by higher costs. And among the policy changes, we've already seen a termination, a cancellation of a lot of government contracts and, grants, and this is already hitting some research, construction projects. Universities are certainly being targeted in a number of ways by the administration. So these are two sectors that are quite vulnerable from policy changes that we really didn't get into. Fantastic. Thanks, Ken. Thank you all. And and thank you is my final thought for today. I'm doing my best to stay focused on gratitude these days of having three teenagers in the house. I I'm very grateful that you, the Aunty, spent part of your Thursday with us. We hope you found the information presented to be insightful, and it helps you make better decisions for your business. After all, our vision here at ConstructConnect is to power, the people and the projects that build thriving communities. Continuing the gratitude train here, I wanna thank all our panelists. You once again, Associated General Contractors of America (AGC)'s Kim Ken Simonson, Kermit Baker from the American Institute of Architects (AIA), and my ConstructConnect colleagues, Fonda Rosenfeldt, Michael Guckes, Natasha Saladino. Thank you so much. Many thanks to our friends at the American Institute of Architects and the Associated General Contractors of America for their continued partnership and and collaboration on this and so many other initiatives. Our partners at Oxford Economics, thank you very much. We have an amazing group of people here at ConstructConnect who work very hard to produce and promote this webcast series. Hailey McClatchy is our technical director. She was answering your technical questions today. Thank you so much, Hailey. My sincere thanks to Amanda Moore, Johnny Bradigan, Jay Kennedy, Julie Riley, Mary Kikic, Hunter Chapman. Wait. We're we're gonna thank Hunter Chapman okay. I guess we can thank Hunter Chapman. That's fine. And, the perennial MVP of the economics group, Marshall Benveniste. And my personal thanks to Anthony Guerreso, Derek, the Kentucky Wildcat, Duffy, and Jen Johnson. Thank you so much for joining us today, everyone. Please keep an eye out for that fall twenty twenty five edition of Construction Economy Outlook. You can register for that right now. Click on docs, d o c s, in the top right of your webcast UI there and sign up for the, Construction Economy Outlook fall twenty twenty five. That's going to be on November 13. We will see you there. Until then, this is Paul Hart with ConstructConnect wishing you a very happy summer. Let's keep building.