Name: The Construction Economy Outlook Spring 2026
Uploaded: 2026-05-14T19:00:13.452Z
Duration: 2 h 4 s
Description: The Construction Economy Outlook Spring 2026

Transcript for "The Construction Economy Outlook Spring 2026": Good afternoon to everyone on the East Coast, and good morning to our friends out West. Welcome to the construction economy outlook spring twenty twenty six. The economics group at ConstructConnect is again proud to deliver our construction economy 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. We'd like to thank our presenting sponsor, ConstructConnect News, For regional and sector construction forecasts, reporting on data centers and megaprojects, full coverage of the project stress index, and economic analysis on the construction economy, please visit news.constructconnect.com. We are once again very fortunate to host a panel of top experts on the North American construction economy, and here's what we're gonna cover in the next ninety minutes or so. Richard Branch, the new chief economist at the American Institute of Architects, will open our program. Richard will walk us through the latest reading of the AIA Deltek architectural billings index and the AIA consensus construction forecast and what architects are seeing in design pipeline right now. Ken Simonson, chief economist at the Associated General Contractors of America, will then discuss current employment conditions, recent trends in construction input pricing, and the impact of tariff and trade policy on construction. Next, ConstructConnect's director of content acquisition, Christy O'Brien, will explain the trends our reporting teams are observing in new planning and bidding projects in The US and Canada. And then Michael Goukas, chief economist at ConstructConnect, will dive into the latest numbers from the project stress index and walk us through our latest brand new twenty twenty six q two construction starts forecast for the huge for The US and Canada. Following Michael, we'll have our panel answer some fantastic questions that, all of you submitted when registering for this webcast. Okay. Now just a couple of, few couple of housekeeping tips before we get started. So the number one most popular question, as you might imagine, that we get asked every webcast is well, it's kind of a two part question. Will the recording of this presentation be available, and when can I get the slides from from this webcast? So, yes, we have both of those. Everyone who registered to attend this webcast will receive an email in the next twenty four hours with links to a recording of the webcast and the accompanying presentation slides. So please keep an eye out for that email. Now if you're having any technical problems or need 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 encounter. And we do sincerely ask that you reserve that q and a feature for actual relevant questions for our panelists or or technical questions for our support team. And, also, in your webcast window, you are gonna find a tab that says docs, d o c s. In that docs tab, you're gonna find links to key resources to help you stay on top of the construction economy, and I'll explain most of those as we go through our program here today. We are, again, also very proud to say that this webcast is registered with the American Institute of Architects for Continuing Professional Education. If you are an a I AIA member and you submitted your AIA member ID number when you registered, the record of your attendance is gonna 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 we have all that out of our way. It is time to put down your pins, close the other windows in your machines, and listen very closely to our next corporate centers. The level of authoritative insight from these experts cannot be overstated. And this series, as many of you know who have joined us for years now, we we've been blessed with continuity for over a decade. And today, we welcome a new voice to our panel, but new, it might be the wrong word because it's a voice, the the this voice that you're about to hear is one that many of you have been listening to for years. Richard Branch is the new chief economist for the American Institute of Architects. Most recently, Richard led the economics group over a Dodge construction network where for nearly two decades, his commentary helped shape how the industry reads the construction market. Over almost thirty years as an economist, he has built a reputation for doing what very few people in this field do well, which is taking complex construction and macroeconomic data and turning it into something that an architect or contractor or building product manufacturer can actually use. At the AIA, Richard now leads the economic research and analysis that informs the architecture profession and the broader building industry. He also leads the two essential pieces of work at the AIA. That is the AIA consensus construction forecast panel, which Richard himself contributed to for years, and the AIA Deltek architectural billings index. We refer to that. You'll hear us talk about the ABI all the time. And that is a metric that anyone serious about watching US construction industry looks at every month. So, Richard, welcome to the construction economy outlook. We're absolutely thrilled to have you here, sir. Hey, everybody. Good afternoon. Thanks, Paul, for that great introduction. I hope over the next, thirteen or fourteen minutes or so, I don't mess up Kermit's, wonderful legacy, with the AIA. And, hi to our panelists and a special thanks, of course, to ConstructConnect for inviting me here to present the viewpoint of the built environment from the perspective of the architects here at AIA. And, unfortunately, I guess it starts with some not great news in terms of what the current state of affairs is in the construction space. What you're looking at here on the screen is a derived series. Right? What I did is I took census construction spending put in place for nonresidential buildings. So took out infrastructure here. But what I've done is I've adjusted or maybe corrected is a better word. I've corrected this for inflation by using the producer price index for construction materials. It's not perfect, of course, but I think it paints a pretty solid picture of what many of you in the industry are probably feeling right now, and that is real construction activity. That is boots on the ground has been flat at best in the nonresidential building space. Clearly, some sectors like data centers are performing really, really well, but many, if not most, of the building markets are underperforming, which is really interesting given if you look at the the the slide here with the recession recessionary periods highlighted that generally non residential building construction grows when the economy is not in recession. And at least as of today, we're not technically in a recession according to the NBER. So why is that? Why is construction underperforming? Well, I really think it comes down to to three shifts that we're seeing, and and they are cyclical, structural, and, political. Right? I think we're seeing cyclical shifts in terms of the broader macroeconomic environment, in terms of high interest rates, rising energy costs, all of this contributing to anemic economic growth. And from a developer standpoint, it's giving them cause enough to to to pause or delay projects. We're seeing structural growth in growth in the structural shifts in The US in terms of demographic aid rapidly aging demographics in The United States. And then we've got mobility shifts from, say, further out in the rural and exurb areas due to, the flexibility with remote work over the past back into, city centers or the suburbs thanks to the return to office mandates. And then thirdly, political shifts. I don't think there's any surprise here. Right? Whether this is tariffs, whether this is stricter immigration, enforcement, or increased geopolitical concern. All of these are, weighing on developers and altering the calculus of a go or no go decision on a project. And when I think you can see then that that first from the structural perspective, from the cyclical perspective, I think you can kinda see that here with with overall GDP. GDP growth, I think this title of the slide says it all. Right? It's steady but certainly not stellar. You look at consumer business, consumer business confidence, it is in the tank. And that weakening confidence fed by higher rates, eroding labor market, and all of this, again, leading to, these massive affordability issues that many Americans fam many American families are facing. But then you look at the stock market, you look at all the spending in AI and tech, and you get a very, very different picture of the broader macroeconomic landscape. And, of course, as in most things, beauty is in the eye of the beholder, and how you feel on the state of the economy as a consumer really in large part depends on the size of your savings or your four zero one k or whether you actually own a home. So what's the truth? Well, I think as in most things, right, the truth lies somewhere in the middle. The economy is doing just well enough, but I think it's developing this k shape or this bifurcation where some sectors, health care would be one and some income stratifications, are doing really, really well, but others are not. I think in some here, there really doesn't appear to be a lot of middle ground in the economy and I think in the construction space as I see it. And as I look forward into 2026 and 2027, I think the economy will continue to be just okay and that I think GDP growth is going to remain pretty weak, especially when you compare it to other nonrecessionary years, particularly, say, in the lead up to the pandemic. Now I did highlight the headwinds there, right, and particularly the Iran conflict and oil prices. But I do think it is worth pointing out, there are some positive things that are helping to offset these negatives. Uber would be one. Right? The the the tax benefits that are going to come to business and families will certainly offset some of that weekend some of that weakening, caused by the headwinds. And I do also think we're going to start to see some temporary or some some boost in productivity this year, thanks to AI enhancements. And just to maybe continue this thread or talk a little bit more about the impact of the Iran conflict and higher energy prices, I I would argue, and I and I'm curious to see what the other panels think, that this is arguably, I think, the largest or the the largest issue facing construction as we look towards the tail end of this year. There's obviously a clear link here between global oil prices and construction material costs. I think the keyword on the slide though is sustained. Right? Will oil prices be sustained at their current level? But just looking at this chart now and how it's shaping up, I think you could probably bet on a fairly sharp increase in construction material costs over the course of the summer. And I think the PPI, and I'm sure Ken will dig into this quite a bit, I'm sure the PPI data that came out early this week is certainly maybe a shot over the bow in terms of of what we'll see with material prices we go through, the summer. And quite frankly, I don't think there's gonna be any materials here that are going to be, not affected by hydrogen energy costs. Either that's because of oil or refining byproduct is a direct input or whether that's through higher energy costs or transportation costs. Diesel prices, for example, are are rising rapidly. So, again, that just continues to shift this narrative and the headwinds towards the headwinds facing construction. And I think this is the big one that will lead to a further dampening in some of our leading indicators as we go through the course of the summer and will certainly weigh on construction spending. And I think it's also going to restrain any potential impact or any potential, actions from the Federal Reserve. Right? Core PCE here, the year over year percent change in the red line is is cruising up at around 3%, and I don't think we've seen the full impact of higher energy prices work their way into core, inflation yet just because there is a bit of a lag between when transportation costs lead into a higher transportation cost lead into other goods prices. So when the year was starting late last year and early this year, I was thinking maybe two to three rate cuts from the Fed. I think that's possibly a big dream at this point. I think maybe we'll get one towards the end of the year. But if you look at markets now, if you look at the the bond markets and whatnot, they're essentially pricing in the potential for a Fed rate hike over the short term. Certainly, again, another headwind facing the the sector. And as we start to dig into con into construction, I think you can sign kind of start to see that bifurcation or that k shaped growth pattern develop here in the very basics in the slide. So if we were to divide the the spending table here in half and you look at the top half with private construction or it's commercial industrial, which is mostly private, those are the sectors that are most directly linked to the broader macroeconomic cycle. Obviously, office here looking like is doing quite well, but, of course, remember that data centers, at least in terms of the census data, includes, office includes, data center. But if we go South Of The Equator here in this table and you look at the institutional space, mostly public projects, and here we're seeing a much more, I'll call it, stable pattern of growth or we saw that in 2025. And I think that is somewhat disconnected from the broader macroeconomic cycle due to the stability of public spending. And I think this graph really shows what's happened in the nonresidential building space since the pandemic. Back in 2019, these three sectors accounted for about a quarter of all private nonresidential building construction. But when you look up to the present day, we're sitting at around 40%, for these three sectors. Manufacturing, obviously, driven by, the Chips Act, Inflation Reduction Act, as well as, onshoring and reshoring activity. Warehousing certainly was boosted there during the pandemic as all that logistics infrastructure got built up by Amazon and other big players. And then looks like we're hitting maybe a soft bottom there in warehousing as well, by the way. But then, obviously, data centers, double growth, double digit growth over the past several years. But it's interesting to note even though we talk a lot about it, we spend a lot of time thinking about it, but in terms of private nonresidential building construction, data centers are really just 5% of total activity. I do think though that that share is going to continue to climb. Right? When you look at the combined capital expenditures from Amazon, Meta, Microsoft, and Alphabet, they're planning on spending $670,000,000,000 in this year to build out an AI infrastructure. And you compare that to some of the biggest capital expenditures and biggest capital plans in The United States over the past several decades, you get a sense of just how staggering, these figures are. And I think that share and that growth that we're going to see in data centers will continue to shape how we view the construction market over the next several years. So what's the future then hold, for construction spending? Well, our leading indicator of construction spending, and and Paul mentioned that the AIA Deltek, architecture buildings index, the ABI, has been negative pretty much all year. So this is a diffusion index. So any reading below 50 means that architecture billings are declining. Any reading above 50 means that they're expanding. And really, that means when looking at the data here that architecture billings have been declining since 2023. Now one of the common questions I've received over the past several years, whether at Dodge or whether at AIA, is why hasn't the ABI reflected what was really strong what was really a strong construction market in 2023 and 2024? If you look back at spending in those years, on average, construction spending was around 14% year over year. Well, the answer is actually really simple, and it goes back to the past couple of slides. Much of the gain in nonresidential building spending over those years was in those three sectors, manufacturing and warehousing, primarily. But architects, by and large, don't participate in those sectors. The bulk of architecture billings are in health care, education, retail, and traditional office, which, remember back to the put in place slide, have been growing at a much more subdued pace. So the ABI remains underwater. And what does this mean? Well, this means that we should see, based on the relationship between the ABI and spending, that this should portend continued softness or weakness in non residential construction as we move through the end of this year and into 2027. Taking that analysis one step further here and adding in a little bit more detail, We still have the billings index here, but now we've added contracts and inquiries. What this shows me, I think, is that developers are curious. They're asking about building projects. But as soon as they get the the cost, as soon as they look at budgets, labor, and financing, and this is a highly technical economic term I'm going to use, but once they see all that data, they get a case of the yips and either slow the project down or cancel it outright. But I would offer though, if you're looking for some good news overall in the data, this might be one. Right? There's clearly demand and interest to build, and I think the question is when will some of these roadblocks facing construction clear out and allow some of these projects to move forward? Well, what we did back in January at the AIA is we asked architects if you could pick one reason why projects are being delayed, canceled, or stalled, what would it be? And when you look at the top two, just under 40% are indicating that some sort of uncertainty in the market is leading to indecision. Budget's obviously an issue at around 17.5%. That's probably going to increase considering oil and material prices over the summer. And then finally, 15 mentioned financing problems. Right? And we know from looking at Fed data that, credit standards for construction loans remains very, very tight despite the fact that the federal, the Federal Reserve rate has been declining at least up until this year. So how do our panelists feel then about the outlook for construction spending in 2026 and 2027? So this panel is made up of nine firms. Mike and ConstructConnect, are certainly a part of this. Paul mentioned that I was a panelist on this, survey for quite some time. And when we look at what, panelists are thinking for 2026, we're looking at just 1% growth for construction spending this year, where we're seeing commercial spending grow, institutional spending grow, but industrial spending declining, so holding back growth in the other two sectors. I would point out though even though industrial construction is expected to fall in 2026, we're still looking at record levels of activity here from a historical perspective. Digging in a little bit more deeper in terms of what panels are seeing first with commercial, and at least based on twenty twenty five's decline, it looks like 2026 is shaping up to be a decent year for total commercial, But as you start to go right at the line there, you can kinda see what kind of pattern is developing. Office up 6%, but remember data centers in the set is does include data centers. You can certainly do the math here for total commercial and office and take out data centers and see what commercial would look like without data centers included. But I think it's pretty obvious based on the magnitude of growth and the level here that if we were to move data centers from commercial activity, commercial activity would be facing another week to negative year. Just look at retail and just look at warehouse. Another bright spot here, at least in the commercial space, would be the hotel space, obviously, at least from a dollar perspective, a fairly small market. And then switching over to the institutional space, and I mentioned that this tends to be somewhat disconnected from the broader macroeconomic cycle due to that stability of public spending. And I think you get a sense of that here when you look at, the forecast for both 2026 and 2027. Health care is going to be the big driver of that. You look at the underlying data from census. It looks like most of it's in the hospital space. Interesting to note, you make a parallel to the broader macro and broader macroeconomic activity and you look at job growth, much of the job growth in The US economy over the past year has been in the health care space, certainly seeing that here. Education, again, solid, not not not, not robust, but if, again, if you look at the underlying data, it looks like there's a lot of strength at least in public, k through 12 buildings. So a lot of negative news here, maybe not a lot of exciting news. Are there any other good elements that we could point to in terms of what we can look forward to in construction in 2026 and 2027? And I think we can if we look at work in existing buildings. The share of renovation work has been steadily climbing over the past several years, and in 2025, renovation work was over half of all architecture buildings. Now this isn't a new phenomenon. Right? When The US economic activity is suppressed, when vacancy rates are high, renovation activity takes on a larger share of the total. And I think it's going to be even more acute in this cycle given high material costs as well as scarce labor. And I don't think we should be surprised when we look at the overall data here that office tops the list of projects that are undergoing renovation work. Vacancy rates in that sector are, essentially at record highs. Some of this is renovation from class c or class b space up to class a. Some of this is conversion into other uses like multifamily construction. Also, we're seeing, renovations, elevated in the education space. Right? The average age of a k through 12 building in The US is somewhere around 50 years old. So, hopefully, I'll end my session here with that positive note that from a business development and a marketing plan, there are still lots of opportunity for you out there in the sector, particularly around renovation and alteration work. So, Paul, I'll shift it back to you. Fantastic. Thank you, Richard. That's a terrific opening for our program. Much more to come, everyone. There is a link to register with the AIA in the chat right now. So you can look in the chat, and I think, one of my colleagues has posted a link there to register, with the AIA. You're gonna wanna do that right after the, all of our design friends right after the webcast today. So moving on, if you if anyone wants to understand what tariffs, immigration enforcement, and labor scarcity are actually doing to the cost of building in America right now, there is no better source than the person you're about to hear from. For twenty five years, Ken Simonson has served as chief economist for the associate associate general contractors of America. And for those years, he has been a source for the rest of us, including the national business press, a source that we lean on for clean, current, unvarnished data on the industry's inputs. Ken's Weekly Data Digest newsletter is the kind of report you read on a Monday, and then you're gonna quote on Tuesday and Wednesday and Thursday on down the week. He advises the US Census Bureau on construction data. He is a fellow and past president of the National Association for Business Economics, and, he is the co director of the tax economist forum. Ken, the registration questions that we got this time were once again, as they usually are dominated by labor and tariffs. We've had folks, like Jeff Bowman from Conoco asking about material cost escalation. Robert Tomasek from Burns McDonnell, asked about a very real worry about craft labor bidding war, when it comes to AI and mega project work. So we have a large crowd here, and we're all looking forward to hearing what you have to share. It's good to see you today, sir. Well, thank you, Paul, it's great to be back with you and, with your many fans here, I will be, trying not to duplicate, what Richard has said or what's coming, but, I do wanna add some context to it. Now let me start with, the employment situation. And this shows that, in, what looks like green to me, although, the tech side says total non farm employment, has, really tapered off over the last three years. It's barely growing. Total construction employment shown by the black line has been increasing slightly more, but there's a real difference between residential construction that is, employees of home builders and residential specialty trade contractors. No surprise that employment has been dropping for well over a year now whereas non residential construction employment shown by the red line continues to increase at a greater rate than the overall workforce. So, that seems to be good news, but, it really does vary by state. In the latest reading from March and we'll be getting, April numbers of, you know, another week or so, 33 states added jobs, construction jobs from March to March. The weakness continued along the West Coast where we've seen that pink color for quite some time, but it's also showing up more in the Southeast. Things have really slowed down there, whereas the Midwest is just charging ahead. That's got some of the strongest greetings and most consistent green color of any of the states over the last several months. We get another reading about what's going on with employment from the Bureau of Labor Statistics in the job openings and labor turnover survey, fondly known as JOLTS. And here, instead of showing year over year change, I've been plotted the reading in each, each year in the history of the series for the latest month, in this case, March. And the series started back in December 2000. So from March 2001 to March 2026, We have these numbers, and each is expressed as a percentage of the workforce that year. So looking first at the red line, hires, was, 3.7% of the entire construction workforce in March. That was up just to skosh from, 2025. But if you look back across the history of that red line, you'll see that these were by far the two lowest months in the history of the series. In fact, hires as a percent of each year's employment has been tapering off. Tapering is mild. It's been plunging for the last four years. Five years, I guess it is. Job openings shown by blue, not at a record low, but, again, plunging for the last four years and now at the lowest reading in about a decade. So this says contractors aren't hiring now. They're not even advertising for jobs very much. But what's different from the last time we saw this, which was when the housing boom collapsed and then we had the global financial crisis, if you go back to that 02/2011 period, you can see that, hires hit a then record low and job openings hit what is still a record low, but layoffs spiked. In other words, contractors, had to lay off workers in order to remain in business. But this time, looking at that gold line, layoffs are staying very close to the lowest in the history of that series. So my take on that is that while contractors don't see a need for replacing workers who leave now, they're not advertising openings. Nevertheless, they sure wanna hang on to the workers who are still there. And evidently, they do expect things to get better. Let's go on to see what's going on, with construction spending. And I know that Richard has provided some, very useful numbers here including deflating them to show real numbers. And, but he also had, in terms of the forecast area and the most recent change, the nominal numbers that is current dollars not adjusted for inflation. And that's what you see here. So, looking at the total construction in black, that's been, edging up just a little bit, in the last several this is year over year change again. The last few months, we've had positive or worst flap. That's better than we saw throughout 2025 when that black line was negative compared to the same months of 2024. But it's been attributable mainly to public construction, which has held steady at a four to 5% growth rate on a year over year basis for, really well over a year and a half now. Private nonresidential has been, the weakling of the group. It's been negative on a year over year basis ever since September 2024. And private residential, in spite of not seeing, much of a pickup in home sales or, home construction or multifamily construction. It's up. And I'll show you a little more about why it's really attributable to what's called, residential improvements. And that is spending by, people who already own their own home. If you look at the top line of this crowded table, it shows you that residential was up 4% in the latest twelve months. That sounds good, but private single family down 4% and that's by far the biggest part of, residential construction. Multifamily just about flat. This improvements figure up 14%, but I so that's good news of you who are serving that market, but I have to caution that even the Census Bureau can content conceives this is a, kind of a a wild ass guess. That's not quite their term, but, nevertheless, they're having to infer it from very indirect and, kind of stale information. Moving on, the rest of the table shows nonresidential spending, and here I've added together public and private. And I emphasize again, this is current dollars, so, don't get excited that more of it is in black, meaning year over year increase than in red. If you see a small positive number, it's probably actually not growth in terms of square footage or other real measures. At any rate, these are listed in descending order of March 2026 size and within the categories and our subcategories also from the largest down. And, you can see that manufacturing still by far the largest nonresidential segment has also had a very steep drop, but I do think that's gonna turn around. I was just reading before going on here that TSMC was celebrating, the topping out of its next huge, fab in, Phoenix. So I think construction spending on the so called computer electronic electric manufacturing plants, basically semiconductor fabs, that will start picking up. We had kind of a low when, Intel hit the brakes on its project outside of Columbus, and TSMC did finish a project in Phoenix, but I expect acceleration then. But drag is on that fourth category, transportation equipment, which was going strong with EV and battery plants, and now those have been halted, scaled back, or slowed down. We have selective examples of new manufacturing coming to The US, but far more limited than the administration, was announcing or expecting. Instead, I think the additional growth is related to data centers and power. So companies like Caterpillar and Eaton are, adding capacity. Very welcome to keep the supply chain going in those areas. So the second largest category, power construction, that's positive and I think certainly will continue to be so. Highway and street construction should keep growing for now, but, we do need to see the federal highway and transit funding bill reauthorized by September 30. And that's gonna be a very heavy lift with this, closely divided congress. Educational spending, a mix of primary, secondary, and higher ed, and then a grab bag of things like libraries, museums, archives. Higher ed slightly negative, but this has my vote for the one at most risk. We've already seen reports in the last couple of weeks of colleges, Hampshire College, for instance, and, other even smaller ones closing their doors by the end of this year. The enrollment counts are dropping drastically as the the baby boom, turns into a bust and, reaches college age or people decide college isn't worth it anymore. And those full pay foreign students are no longer able to get visas or decide that it's not a good bet to come to The US. Commercial construction continues to be negative on warehouse. It's up on, the retail side, but that really will depend on where you are. Office, as Richard mentioned, a very deceptive figure on census, report because it includes data centers. Well, finally, they are disaggregating this if you go, to their historical data part of census.gov slash construction spending, And there the truth is revealed. Data center construction up a whopping 34%, and that's after growing as much as 80% year over year, not so long ago. And other private office is still declining steeply. Public office also now down. Transportation is a mix of modes and public and private. Airports, I've go through several most weeks, and, they're all adding gates or, updating the concourse, changing the mix of retail and restaurants, putting in luxury clubs. So I think airport construction will continue. Transit down sharply and likely to stay that way, at least under this congress. Health care split between the hospital, medical building, and special care. This is the first time in quite a while that I've seen all of these are positive on a year over year, but special care is the the most positive and that should continue. It it includes things ranging from highway side urgent care centers to, diagnostic and testing centers, long term care and hospices. And as more of the population ages and as care gets more sophisticated, more and more of it will be delivered outside of hospitals. And then across the bottom, I've squeezed the other eight categories, moment, they're all positive. I have to say that's the first time I've seen that in years, but, it is contributing in a small way to many segments. Let me move on to talk about tariffs, and their impact on construction costs. Richard said something about the inputs for new nonresidential construction. This one building and other kinds of construction. It's basically all materials use nonresidential construction. And, over the last twelve months through March, it went up 4.4%. Well, of course, we've continued to see higher oil prices and those are feeding through, as he said, to all construction materials. And in fact, the combination of the impact of the war and of tariffs is causing eye popping increases in the things in the bottom half. Diesel fuel because of the war up 51%, up 38% in the last twelve months. That was the most in, the second most in the fifty year history of this series on a single month. Steel mill products up 15%, aluminum mill shapes 34, copper and brass mill shapes 21% year over year. So, an awful lot of inflation is being built into what construction firms pay. Now as a representative of the industry, I never ask or talk about what they will charge, but they can't go on absorbing this. So I think owners have to expect that they'll be seeing some of these price increases passed on. Let me go a little more into tariffs. Of course, the Supreme Court, invalidated the tariffs that President Trump had announced in April. He immediately put on a 10% tariff, on the same countries, but that was blocked by a recent court decision. Still, it's being appealed, so we don't know where that will wind up. At any rate, the, Customs and Border Protection has begun, paying on out, refunds to people who were hit by the invalidated tariffs, but very few contractors qualify as importers of record. Generally, they're buying from an importer, and unless their, their invoice documents the amount that was tariff, I don't think they have a case for getting any refund unless, the importer takes pity on them. Still in effect and much more important for construction are tariffs of up to 50% on steel, aluminum, and copper. Big jump in the, countervailing and anti dumping duties on Canadian softwood lumber that went into effect last, August. And, the tariffs on, vehicles, both light and heavy trucks, have been, they're they're a mix depending on where they're built, but, quite a burden also. So construction, because it's so dependent on materials and particularly these ones that are being hit by heavy tariffs, can expect to see much higher costs going forward than many other industries. How about pay? Well, we get various measures of them with the employment report each month. We hear about a series called average hourly earnings for production and non supervisory employees. That's called that's basically the, straight pay for and overtime, but not bonuses for craft workers and office workers who aren't supervisors. And you can see it's going up much more for construction than in the broader private sector where pay increases have cooled off a lot. This is kind of a good news, bad news story. It means construction has been able to add employees more than the overall economy as my first slide showed. But it also, means that yet another reason construction costs are going up more than other things. We have two other measures. The Construction Labor Research Council analyzes all union settlements in construction, and they found that those were going up 4.7% last year, much more than the contracts they replaced from typically 2022 or 2021 with one to two or 3% increases or a freeze in first year pay. And then PAS is a firm that has surveyed construction firms about salaries, wages for non organized employees. And they also are saying that, their survey respondents expect a four to four and a half percent increase this year. One more look at what's going on around the country. Construction relies much more heavily than other industries on immigrant, workers. So we're very vulnerable to what happens on deportations and immigration enforcement. But again, it varies a lot by state. The ones in deep green, California, Nevada, Texas, Florida, and Maryland, 50% or more of the workers were foreign trade workers, foreign born. The states deep red mostly near the northern border, single digits. It also varies a lot by craft. How about the war? Fuel prices, of course, are affecting the cost of every material, the shutdown of alumina, production facilities in Iran and The Emirates and, inability to ship things out of there, means that, the supply is being squeezed. That will affect The US, although we haven't seen it yet. Delaying projects as Richard reported, because their costs are going up not just for construction, but, if they are themselves producers and rely on imports or import competing things and, also their supply chain may be a problem. I think, that k shaped economy that Richard talked about means some people will be traveling less. So somewhat less demand for structure investment on hotels, retail, restaurants, amusements. And then to the extent that financing was coming out of The Middle East, that I think will be cut back as those private investors and sovereign wealth funds, either have lost their source of funding or devoting it to rebuilding their own economies. So where do I see things happening? The higher tariffs still around, the uncertainty about how long they will last, how much the rates will go up or down is causing hesitation on the part of many owners. And, the immigration deportation policies affecting not just the supply of workers for construction, extent that states have been adding population and cities in particular, adding population from immigration and suddenly not having them, less demand for housing, schools, retail, other consumer facing kinds of things. Larger deficits are keeping interest rates high. An hour ago, Freddie Mac announced that, the thirty year fixed rate was still over 6.3%. That's gonna keep home building down, to very low levels of increase, if any increase. To wrap up, I do think that economic growth will continue. The economy is incredibly resilient, but it's very unbalanced and it is at risk of decline at least over a single quarter. The inflation risk is extremely high. I do think that we're going to continue to see blockage, and, reduced supplies of oil coming out of that region, and that will keep, prices rising not just for, diesel fuel and gasoline, but for any product that requires energy to produce, and that means everything that's used in construction. I'm still modestly hopeful about single family construction and, multifamily, but not much growth. The worst markets, I think, will be warehouse, office, and higher ed. The best bets, data centers for sure, power, airports, specialty health care. Manufacturing, a mix of positive and negative, but probably not positive overall. Materials cost going up at least three to 5%. Certainly, the risk is to the upside. And, labor costs also rising, continuing to rise four to 5%. So that's my story. I'm sticking to it till I get new data. When I do, I'll put it in the data digest. You can get that by writing me at ken. Simonsonagc dot org. I'll be glad to send along my latest slides also. So back to you, Paul. Fantastic, Ken. Thank you so much. And, folks, if you don't already receive Ken's weekly data digest newsletter from the AGC, I highly recommend signing up for that immediately after the webcast today. You can do so at a g c dot o r g. Natasha has put that link in the chat for us. You can scroll, in the chat and and find that link. Now let's, let's keep it moving forward. Every forecast that you're gonna hear today, ours that Michael's gonna present a little bit and our colleagues that we've just heard, all of those forecast rests on someone seeing projects before anyone else does. So for ConstructConnect, that someone is Christy O'Brien and the teams that she leads as director of content acquisition. Christie helped build the entire engine here that makes coverage of our our coverage of private sector projects really, the best out there. And her reporters and researchers are on the phone every day with architects, developers, owners, and contractors at the very first moment a project enters the planning pipeline. So while the rest of us are are are well, I'm not modeling, the these forecasts, but my esteemed colleagues are are are modeling these forecasts and, working out those outlooks. Christy and her team are watching the market actually start to move in their conversations with these folks. So, Christy, I'll ask you, how are things looking out there? Thank you so much, fall. Well, first of all, thank you, for having me back. I presented in fall and I really enjoyed that, and the date of the spring has given us a lot to talk about. So, just to kinda follow-up a little bit on what Paul was just saying, a quick note on the data that I'll present. As Paul mentioned, my team sits at every stage of the projects that we publish. We gather the data, we confirm teams, scope, status, timelines directly with the people doing the work, and then we publish it for our customers across the construction industry. So when I walk you through the data today, I'm sharing active projects that we are publishing to customers, over the last few years, specifically in bidding and planning stages. So to start, let's start with The US bid activity because this one, is really encouraging. It's a good way to open. So, overall, bid counts are up 10.9% year over year, private is up 12.2, and public 10.8. Now what's significant about that to me is what it represents on our side. In the fall, private and public, we're pulling in opposite directions. This spring, they're moving together. So, that's showing up in the volume of bid projects our team is verifying and publishing every week. We're a busier team this spring than we were last spring, and the pickup is geographically broad. It's really not concentrated in any, you know, one corner of the country. So we're going to keep listening closely to what our sources are telling us about the cost pressure and tariffs, because that's where the next chapter of our story is going to be written. But right now on the bid side, the signal is genuinely strong. So moving over to Canada, this slide is a recovery story for bids. Overall bid counts are up 16.5%, private leading at 27.4, public not far behind at 16.4. So for context, our Canadian content team had a much quieter Q1 twenty twenty five, so a rebound of this size is something we genuinely feel in the in the day to day of the work. There are simply more projects coming in to verify and publish than there were a year ago. And, a lot of what our Canadian team is confirming right now is tied to industrial and AI related investment. The thing we're watching is how cross border conversations are evolving. Our sources on both sides of the border are increasingly raising the same supply chain concerns. Canada is not immune to what we are seeing in The United States. Next, I will talk about our new U. S. Planning projects. Now this is where I feel the data gets it's where, my teams have put a significant amount of focus in recent months. Planning projects for reference are the projects that we're tracking in the pre bid statuses, so conceptual design, pre construction. Overall planning projects are down 4.5%, but private sector is up 26.2. Public is down 20.6. So two completely different stories, on the same slide. On the private side, our team is having very different con different conversations than we were a year ago. Projects that have been quietly sitting on the shelf, owners and developers, we'd be we had been checking in with for months are are starting to pick things back up. So we're confirming movement on those plans now. And a lot of the new entries our team is publishing are top notch, which we've been talking about so far, AI, data centers, energy, manufacturing, reshoring, so some real large scale investments. On the public side, the federal and state stimulus pipeline that drove a lot of our public project verification work over the last couple years, is winding down. We're feeling that on the front end, there are just simply fewer new public projects coming in to replace what's been completed. So moving on to Canada planning projects. And Canada planning is basically flat overall, at 1.8%. But again, the mix underneath the story, you have to look closely at that. Private is up 58.6% and public is down 7%. The private surge is the same AI and industrial investment wave we're seeing in The U. S. It's now actively reaching Canada. Our Canadian team is confirming early stage information on plans that frankly, we just weren't seeing a year ago. So these are the new types of conversations for them. On the public side, fiscal caution is pushing some timelines out and we're not seeing, the new project entry. So, moving on to, new projects by building use in The United States. This is, definitely one of my favorite slides because it shows you exactly where the project mix our team is publishing has shifted. Industrial is up 341%. That is not a typo. And the bulk is, the AI supercomputer facilities and manufacturing reshoring. It's the largest single category jump anywhere in our data set, the one, the one that my team works on. Data centers are up 94%, multi residential 64, retail 40 and medical 23%. The multi residential rebound has been a really interesting one to watch. Our team is seeing it most strongly in, the Sunbelt and Mountain West, where housing demand has been waiting for rate stabilization, to finally let loose. On the other side of the ledger, warehouse and distribution is down 19% and I want to be clear about that one a little bit. We feel that's a managed correction, not a distress signal. It's the e commerce normalization our team has been expecting now for a couple of years. And then the bigger point on this slide isn't any one number, it's how dramatically the mix of what we're publishing has reshaped over the last twelve months. And then the same, information for building use in Canada. A Canadian view of the same slide is dramatic, and I'll give you a quick word of context before walking through these numbers. Canadian volumes are just smaller in absolute terms, so the percentage growth rates can look amplified. I always recommend pairing the growth rate with the underlying count for the full picture. So we've got up, over 1200% industrial over 600% in retail, 79%. The same AI and industrial wave I just talked about on The US side is now showing up in our Canadian pipeline, and the the project types our Canadian team is verifying have genuinely shifted. The one, we'll be watching through the back half of the year is medical, which is essentially flat at 1% growth. It's a notable contrast to what we're seeing on The U. S. Healthcare side. And then lastly, I want to close like I did this same thing in the fall with just one project of many, that really is capturing, you know, what's sitting behind a lot of these numbers and not to no one's surprise, data centers. This spring spotlight is the XAI Tulane Road Data Center in Memphis. It's published in our system as of March. This is an AI super supercomputer and large scale GPU cluster, what we call AI native construction. These aren't traditional data centers retro fitted for AI workloads, they're designed from the ground up for hyper scale AI com compute, and they're reshaping where construction dollars are flowing across much of the country. So to put the scale in context from our side, our teams, US data centers, we are verifying and publishing nearly twice the data center projects in four months that we did in the same window of all of last year. These are exactly the kind of projects where our source relationships do the heavy lifting, they're often confidential in the early stages in confirming the scope, value, timeline takes the trust we've built with the people behind them. So pulling it all together, bids are strong in both The US and Canada, the private planning pipeline is surging on AI and industrial, the public side is softening a bit as stimulus winds down and the project mix our team is publishing has shifted meaningfully in the last twelve months. So we'll keep doing what we're doing, what we do, we'll gather the data, confirm it with our sources and get it in the hands of industry professionals like yourselves. And with that, I will hand it back to Paul. Thank you, Christy. Great insight from our reporting teams as usual. So, folks, we'll keep it moving here. Very few economists get a chance to build a brand new metric from scratch and then watch the industry adopt it as a leading indicator. Michael Gookas has done just that. Shortly after joining ConstructConnect in 2022, Michael built the project stress index, a forward looking signal, of when projects are starting to stall in The US construction pipeline. The PSI is now regularly cited in national business press and for good reason. It's it it tells you about trouble in the market before that trouble shows up in the actual spending data. So Michael took on the role of chief economist for ConstructConnect in 2024, and he now leads our economic reporting and our construction starts, forecast for The US and Canada. Michael, I believe you brought along, some of the latest readings for the project stress index and our our fresh analysis from our q two twenty twenty six starts forecast. So please take it away. Alright. Great. Paul, thank you so much. So I'll get right into this. So just to to give a quick overlay, because I know it's already been covered. But in general, our outlook for the macro level is, one of near term challenges you can see here. We are forecasting GDP growth of of around 1.9% for this year, and then it picks back up to, you know, two and a half, 3% in the years thereafter. So that is an orange. It's not good, not bad. Just some short term challenges. One of the other challenges, though, is right below that, population growth. So population growth, as you can see in in prior years, was much higher, close to 1%. With the changes that we've seen in immigration, right, we're we're we're taking our population growth forecast all the way down to point 2%. And just to give a little bit of context, native born births account for point 1% population growth. So so half of that is, still native birth. The other half would be, immigration oriented. So that has changed significantly from previous years' outlooks, and that will be a bit of a headwind in the years to come, not just now as well, if these trends continue. Moving further down, I would just go straight to the ten year government yield. We can see here that remains around 4.2%. That also gives us a sense of where inflation is because inflation and the ten year government yield are very closely correlated. So it is essentially a higher for longer situation that we're that we're looking at. Not terribly higher, but as the other accounts have pointed out, you know, inflation remains a challenge. The number just yesterday was one of the more challenging ones we've had in recent history with the, CPI. I believe it was at 3.8%. So moving on from there, you know, we we're in this kind of ho situation with the economy. But the interesting thing is is that with the project stress index, we're actually seeing a little bit of positive news here. If you've, if you're not familiar with the PSI, we look at on holds, bid date delays, and abandoned projects. Of Of course, abandoned projects would be the most severe form of project stress, and this is just an equal weight measure of those, three measures, and they're all indexed back to 2021. So a reading of 100 tells us that we're at the same level of project stress that we were back in that year. So right now we're at 98.7. So we're we're flirting right with that 2021 level. The interesting thing though is when we go a level underneath this and look at what is driving these numbers, we see that abandoned projects really since 2024 have been the new driver to the PSI in the years prior. Abandoned projects didn't have nearly the kind of influence that they have since, we saw, first of all, a change in interest rate outlooks. If you all remember, we had a real challenge with higher for longer interest rates beginning in 2024 where expert expectations at that at that time in the market where the, the Federal Reserve would be cutting rates, inflation would be falling, and, of course, none of that happened. We ended up with this higher for longer situation that we continue to live in today. And that had that greatly impacted what happened with project abandonments. I believe it it resulted in a lot of owners and developers simply realizing that at these higher interest rates, there was simply no profitable path forward. Projects simply weren't going to pencil out. And so we've seen abandoned projects play a much greater role. In fact, the greatest role, now in our PSI. And so, this is something that we continue to monitor, and it is also freely available. For those of you who wanna keep, track of this, it is available through our economic resources web page. One other thing, and you'll hear me say this again and again, we have to always be getting below the surface. You don't wanna just look at top line numbers in the construction industry to make your business decisions. You really need to get below the surface. I think Richard and and Ken both alluded to this a little bit in their presentations. But when we look at the subcategory level data like we are here, this is our our year to date actual results. So data through March of what is happening. And and of course, top of of the list is data centers, which is part of the private offices category. That has grown by 380 in the first quarter of the year compared to the 2025. And then that number, of course, you can see it it all the other subcategories underneath that are a bit in the distance there. But hotels and motels still up a 150%. Hospitals up over a 115%. Right? All other civil has nearly, is has doubled. Right? So we've come off the blocks in some of these subcategories in a very strong way, which is great. But, of course, not everything is doing great. You can see at the bottom half. Right? Sports convention centers, those are down more than half. Airports are down almost 40%. Just remember though that some of those numbers are down simply because those, subcategories may have had a really strong first quarter or prior quarter result. And so you're coming just back down off of a peak. But again, it it is very important to show this to our audience because which subcategories you decide to compete in along with which geographies, those are the two most important things that will decide your company's future. So that's why it's so important to be strategic in how you, pick those combinations of areas and subcategories. There are some some really big trends in construction that I wanna talk about today, and I'm just gonna do it in a few minutes at a very high level. One is mega projects. Mega projects as we define them are are all projects over $100,000,000,000 or sorry, $1,000,000,000 in total starts value. The other thing I would mention too while I'm on it is that I'm looking at starts data, which is different from how Ken and Richard looked at it. Starts simply take the total value of a project and assign its value to its first day of of construction or its brown a groundbreaking day. And so I look at data a little bit differently from the other gentleman here on the pod on the the the webcast. And so my numbers will look a little different. In fact, my numbers are going to look a bit more rosy, I should mention too, because of the strength that we're seeing from the data that we get from Christy and all of her team's hard work. So going back to to where I was real quick, mega projects over $1,000,000,000 in total construction value. They now make up over one quarter of all nonresidential spending. If you go back in Hushu, you can see here where there have oftentimes been years where it's less than 10% of all, nonresidential construction spending is from these mega projects. But this is a trend that we've seen in the last few years that continues to impress us, and we don't see it slowing down. Part of that, of course, comes from data centers. You can see here, this is our data center data. As Ken mentioned, more and more, outlets are now breaking out their data centers from their traditional offices in order to show what's causing changes in that office category. This one here, you can see we went from roughly, 10 to to 15% of total dollars back in the early twenty twenties were associated with, data centers. Now in the latest year, we saw that 92% of all of our office dollars were associated with those data center projects. It has a in this next slide, I'll show you. The four year CAGR going back from 2021 to 2025, the four year CAGR was over 100%. And you can see data center starts here as a percentage of total nonresidential building went from under 2% in 2023 and in those years prior, up to 22% in just the last year. So we've seen this phenomenal growth in data centers, and that is part of the reason why when we look at our forecast, you'll see here that we're forecasting $826,000,000,000 in data centers in in office spending, I should say, which includes data centers. Right? The majority of this will be data centers. The other parts to the data center strip cart, of course, include power infrastructure and then water sewage and treatment. Right? So so providing the power in the water that these data centers need. And and from that, you know, one of the most interesting things is when you look at, the power infrastructure part, we grow that by 55% over the the next five years. So that's a 9.2% CAGR there even though that orange line is dwarfed by the dark blue line. So the so these are the big things that will be moving the entire industry. And you can see here if we were to pull out, offices, that offices category from our nonresidential building forecast, you can see our our our current forecast is in the dark blue. That's what we're reporting. If you were to remove the offices component for it, you can see how much of an impact that would have here in this year. You would go from 1.5% growth to almost a 9% contraction. So that should show us just a little bit of of the importance of data centers in our outlook. In the years to come, of course, you can see where even in their own right outside of offices, nonresidential building resumes growth. Of course, it's not as strong, as with, data centers in that dark blue again in 2027, '28, and '29. In 2030, it shifts only because we show, offices peaking offices again. The data center picture we see, starts peaking around 2029, maybe 2030. And so once we hit that peak, of course, data centers, start starts to slow down. Doesn't contract. It's simply slowing down from from the incredible surge that we, expect to see over the next few years. And then lastly, I just wanna get into a couple of our starts forecast now that we've covered those two big, drivers of nonresidential construction, that being mega projects and data centers. This is just, again, looking at all of our subcategories and understanding that there's opportunities across the board. Right? So, right around half of our subcategories are expected to grow, again, led by data centers. Of these, many of them will grow faster than the rate of construction. So even if we, sorry, rate of construction inflation. So even if we had construction inflation of four, five, 6% this year, you would still see a strong, real growth in several of those categories. Other categories, are are going to struggle more. Right? We see airports, government offices, and manufacturing. Again, many of those that are struggling are simply coming off of 2025 highs. And then lastly, this chart is very similar to one that I think Richard showed. Here, I have, PPI construction materials. So the inflation rate, the price inflation for construction materials. But I've overlaid it this time with, oil prices, energy prices here in The US. So I'm using West Texas Intermediate, not Brent crude, which is more of a global standard. And I've called out two areas here in those gray boxes. The first one is in, 2018 and 2019. This is important because at that time, if you'll recall, under the first Trump administration, we had 25% tariffs on steel. I think it was 10%, tariffs on aluminum, slightly lower tariffs there. And that caused the blue line, that construction materials inflation rate to start to ebb up. And then on top of that, no one talked about it at the time, but we also saw a near 50% increase in West Texas oil prices on a year over year basis. So the combination of those things, as you can see there, brought construction inflation to 8% for a very brief period of time. Now you come back to or you go over to that second box on the far right side where we are closer to today, and you can see where Liberation Day had an immediate impact on construction materials. We moved up to around the 6% range. And then at the very end there, you can see that orange line, that's energy prices ticking up as a result of the Iran war. At recent peak, it was just over 60% there. They've fallen just a little bit in the last month, but not very much. And so the question becomes one of well, first, clearly, construction inflation hasn't priced that in yet. And the second question then is, well, if it hasn't, you know, where do we go from here? And the question becomes one of, you know, well, does this construction inflation rise to 8%, 9%, or maybe even higher than that? So this again, I show this just to let you know that there's going to be some short term pain still to come here, and we need to be watching this very carefully. Last, I just wanted to give a quick shout out to, labor worker productivity. What I have here is both US and Canadian productivity. And and, of course, the one commonality you can see here is that between pre COVID in 2019 and the latest available figures, we see that productivity has been challenged, in both of these, national markets. Construction, US construction output per worker at 93.7 and ninety four percent for cancer. You can see that they're they're both down almost ten percent there on an index basis. You know, persistent post COVID productivity clients seem to be a structural headwind, right, on top of material and energy cost pressure. So it it creates that challenge of asking ourselves, you know, when we're struggling with material prices, when we're struggling with our labor force, you know, how do we deal with all of these headwinds? And I think a lot of it is just going to come down to, being smart, right, with how we use our labor, how we use, investments in AI and other machinery and equipment, right, to solve problems where we possibly can. There's so much more. Our construction news website's a great resource of best practices and and how we can not only keep on top of the data, but but keep on top of of those activities that will really help us get ahead and, and, you know, meet the the challenges as they arise with these headwinds. Thank you, Paul. Hey. Fantastic, Michael. Thank you. Excellent information, as usual. I'm gonna zip through these next couple of slides very quickly so we can make up some time. I wanna make sure we got plenty of time for our q and a. We would love to meet you, take a look at some of the activities. Our team is out always out on the road, especially when they emphasize that time when they we will be at the AIA, expo, next month. That is on June June, and we'll have a booth there, Booth 1155. Michael is presenting. I know Richard's gonna be there. Richard, I can see that you're you're gonna be presenting. Right? Yeah. So Richard will be there presenting too. So please come by. Stop by our booth. We'd love to meet shake your hand and meet you, in person. Everything these next couple of slides, I I wanna refer you again to the docs tab, d o c s tab in your, webcast, window. There, you will find links to all of these. We've got a free webinar in a couple of weeks. Great for contractors. It's it's building season now, and and you still gotta keep your pipeline going and your estimates still had to be sharp. So, this this, webinar, free webinar in a couple of weeks is gonna help you do just that. It's kind of a a no bull. Here's what how AI can help you streamline some things. Make sure you go, check that out for our contractors. Then all we have a lot of Canadian folks on the call. I wanna direct you to links in the docs there to the Journal of Commerce. That is our Canadian construction news channel for Western Canada and then daily commercial news. That's for Eastern Canada. Those links are in the docs. What's next? Then we have our economic insights page that Michael was just talking about. You can use that QR code there. Also, links to economic resources. Those are all free, and available on our site. The link is in docs. What's next? Yes. And thank you one more time to Construct Connect News, our our, presenting sponsor here. Please visit news.constructconnect.com. Excellent articles every day, there about the construction industry with a with a big focus on the construction economy. So now with that, I am pleased, to introduce my esteemed colleague, Natasha Saladino. She is the senior product marketing manager at ConstructConnect, and she is going to moderate our q and a with the panelists. The floor is yours, Natasha. Thank you so much. I would invite all of our panelists to come on stage, Ken, Richard, Michael, Christy, for a q and a, and we will get to some of the questions that you guys have, have asked of us. The first question I'm gonna send over to you, Richard, which is from Nick Schultz. He wants to know what is keeping you up at night. The shorter answer or the question might be what's not keeping me up at night. Yeah. I think I think for me, it's the uncertainty over the Iran conflict, and the ultimate impact on oil, not just oil passing through the strait, but a good deal of global shipping goes through the strait as well. So the the impact I think here is is much beyond energy prices, much beyond material prices. But just back to you know, I'm I'm not gonna say this is as concerning as the supply chain crunches we face in the the immediate aftermath of the pandemic. But when you have such a major global shipping channel closed down, and uncertain whether or it will open on a day to day basis, I think that's what's really keeping me up at night in terms of, again, that calculus of a go, no go decision on a building project. Great answer Richard, thank you so much. Next question I have is for you Ken. Selena Davis who's an office manager for first construction asks, as a smaller GC focused mainly on municipal projects, what is one strategic shift we should think of making within the next twelve months? Are municipalities becoming more receptive to material price escalation clauses? Oh, I wish. I think that this will be a major challenge for contractors for any size of firm. But, AGC does try to help contractors show objective information, namely from the Bureau of Labor Statistics on what has been happening and why construction explain why construction costs are going up so much more than other indicators of inflation. So many, owners of public agencies in particular are likely to use the consumer price index. And while those prices have been going up, more than they had in the last few years, 3.8% is much more manageable than what construction firms are facing. So I'd be glad to, meet with any public agencies, to the extent that, contractors can arrange those. I'd be glad to hear from them about that. But, there there's no, those kinds of project managers are also very constrained by their own local budgets. And, unfortunately, state and local budgets are really tightening. We're seeing in many cities and and some states having to cut back on things that they previously were spending money on. And construction is always vulnerable there since in many cases, you think you can put off a new project even, unfortunately, rehabbing something that may be getting in, in need of that. Thank you so much, Ken. Michael, I have a question for you, I don't see you on camera but I just want to make sure you can hear me. I can hear you. Awesome. Here's a question from Brent Van Dam, who's an economist at John Deere. The question is, what is your forecast for data center construction starts through 2030? Right. So, I showed that in my, chart. Right? So we're looking at, you know I think it was it was just at or around $200,000,000,000 at at that point. If we look at what we did last year, 2025 was an amazing year. I think we hit about 81, $82,000,000,000. Right? So so on an annualized basis, we'll we'll we'll double that, I think, in our 2029 peak, Then we come right back to about doubling at that point. So again, you know, the the interesting thing will be the $826,000,000,000 over the full five year forecast. And then how does that play out? And I think, you know, Richard and and Ken did a great job of talking about put in place data. Right? Which is how do we actually turn those dollars into physical work? And the the the challenges that we see with, you know, labor and materials will certainly, you know, have a role to play in that. But but, you know, the the pipeline of work, the demand for those new data centers is just insatiable. Awesome. Thank you so much, Michael. Christy, we have an anonymous question for you. The question is, ConstructConnect is closer to the front lines of project active activity than most. Beyond what shows up in the official numbers, what is your team hearing from the field? Architects, GCs, owners that might be signaling what comes next. That's a great question. So our team has conversations every day, across The US and Canada, and a few things that are coming up consistently that aren't fully in the numbers yet. The biggest one is labor, and it's not just in the trades, we're hearing it in the design seats too. Architects are telling us they're stretched thin and that's part of why documents are moving slower, through the pipeline than they used to be. The another thing is that, the owner sentiment is genuinely improving. There's a we can't wait anymore feeling that we didn't hear, maybe this time last year, even though tariff anxiety has not gone away. And then also our sources are starting to mention early stage projects in mid sized metros. We don't usually associate associate with industrial growth, you know, quiet activity that hasn't shown up in the counts yet, but the data tends to catch up to those conversations, it always does. So we're definitely keeping, you know, we're listening. We're waiting to see what happens. And if you're curious about what comes next, we have a fall webcast that comes every year in November. I put a link in the chat. Click the docs section if you want to link to that, sign up for that, and we'll be able to give you a lot more information then. Thank you, Christy. Okay. Next question. I have another one for you, Michael. Steve Dawson, who's the CEO, his question is, what is the construction outlook for the Upper Midwest over the next three to five years? So it's it's actually pretty darn good. It it does vary. So you have to look at it. You know, if you're interested in in looking at those five or six states to make up that territory, It is important to understand that state by state, activity is pretty volatile, but it's it's pretty strong overall. We saw a $115,000,000,000 in total construction starts. Last year, our 2030 forecast for that region is a $124,000,000,000. So, you know, total change is 8.1%. So that that leaves you a a compound annual growth rate of around one and a half percent. So that's that's fairly good. But again, like I said, before, you know, you have to be careful and thoughtful about which subcategories you pick. Even if you, stick to a certain, you know, census division like the Midwest, you know, picking those subcategories will make a huge difference in what you experience and and the opportunities that your firm, will be able to, to lash onto and take advantage of. Awesome. Thank you so much, Michael. I have another question for you, Richard. This comes from Jenna who's a senior director of cost engineering. The question is, with the current political pressure on the Fed and BLS, do you still believe the BLS data is as accurate and reliable as it has been in previous years? Yeah. I'm just looking on my screen for the fire alarm button so I don't have to answer that question. No. You know, I think I think I, you know, I can answer this in two different ways. Right? I think I think number one, at the grassroots at these organizations, is there nefariousness, right, I'm not sure if that's a word, in terms of cooking the books on the numbers, and I would say absolutely not. The people that work at the Census Bureau, BLS, they are good people that are stewards of some of the best data on the planet in terms of a broader macroeconomic output. So I I I have absolutely zero concern about that. I think where I would be concerned about data quality is, and I think we're starting to see this particular in the CPI data, is due to the Doge cuts, we are starting to see more of the underlying CPI data imputed rather than directly measured. Right? So an example would be before the dodge doge cuts, somebody would have walked into a Walmart in Topeka and checked on the price of Cheerios. Now a lot of that data is being imputed based on results in other parts of the country. So that potentially could down the road lead to, either an overstating or understating of the inflation, but I think as of right now, I'm I'm not overly concerned with data quality. Let me jump in and second that, I served for six years on BLS's Data Users Advisory Committee. and six years on the Census Scientific Advisory Committee. And I know that these guys are considered the gold standard for economic statistics around the world. But they are sorely underfunded. BLS funding has basically been flat in nominal terms. So it has shrunk a lot in, constant dollar terms for more than a decade and census, while they were eventually able to break out data centers in their historical data, Excel files as you those of you who look at their press release every month still don't get to see that. You have to go deep into their website. Thanks, Ken. I know that was a tough one to answer, and that's why we've got the best word to answer those ones. I appreciate. those answers, Richard and Lauren. Ken, I do have another question for you. This one comes from Robert who's a construction project manager. What is being done to increase craft capacity to support the electric infrastructure and AI forecasted mega projects? I am currently paying premiums to make my project more appealing to attract the best talent. I can see this escalating into an untenable bidding war soon. Hello. I I'm afraid that is what you're going to face. I've been hearing how, data center projects are pulling electricians and other skilled workers from all over the country to sites where those things are going on, whether it's in Louisiana or West Texas or out in, the Great Plains. So, it's gonna be a challenge to hang on to, an electrician who is willing to travel. Now in some areas, the electricians prefer to stay in their local area, but, you gotta be competitive on wages, and those are clearly going up a lot. In terms of building up that pipeline, AGC, its chapters, and many contracting firms are working with school districts, community, employment organizations, state and local workforce development organizations in order to try to, interest more people in going into construction crafts. And there's some evidence that that's working. But, obviously, it'll be a long time before somebody leaves high school and then is ready to be a skilled electrician on a power project, transmission line, and data center, or a semiconductor fab. Thanks for that answer, Ken. And thank you so much to everybody who submitted questions. Keep submitting the questions in the q and a, and we'll we'll, get to them after the fact. I'm gonna hand it over to Paul. Thanks for having me today, and, we hope you've had a good time with us today. Outstanding. Thank you, Natasha. Okay. We'll wrap it up, and this is gonna be our super lightning round for final thoughts. Here's what we're gonna do. I usually ask for a final thought from all the panelists. And rather than an open ended close that I usually ask for, I wanna put one specific question to each of you. We received, more registrant questions about AI than just about anything else except maybe data centers, but those kind of, go hand in hand. Right? So, the panel deserves to weigh in on this, on this AI question. So here's the question I wanna propose, and I'll go around. We'll ask for questions very answers very quickly. The question is, where in the industry is AI actually moving the needle right now, and where is the hype running ahead of the reality? So talk leave your answers. Like, is it estimating or project, or or project controls, design, takeoff, project pipeline, job site productivity? Pick whatever you like. Give us one place you think that AI is genuinely changing the game in the next twelve months and one place where we might be I don't wanna say kidding ourselves. Maybe just a little over our skis perhaps. So I'm gonna ask this time for thirty seconds or less. We'll start with Christie. What do you think, Christie? Where is it really moving the needle, and where is AI maybe kinda fooling us a little bit in the construction industry? Yeah. Great question. So, yeah, I think the place AI is genuinely moving the needle right now is, the estimating and takeoff workflow. GCs and subs we talk to are compressing measurement and quantification work that used to take them days, and now it's hours, and they're staying on it because it actually does perform. So that trend is going to keep accelerating, I would say, over the next twelve months for sure. And then, where I think we are maybe overestimating a bit is the idea that AI is going to replace the human conversation behind a construction project anytime soon. My team confirms thousands of project details a week, and the part that requires picking up the phone and earning a source's trust, that's where the real intelligence is, and the tooling around it, is it's getting much better, but I think the judgment and human interaction piece, is not replaceable yet. Awesome. Thank you, Christy. Ken, same question to you, sir. Well, what I hear is the contractors, like, other firms are using AI much more in various office applications, whether it's, HR, billing, all of the legal functions, it's a lot harder to apply it on job sites where, of course, every project is different from every other one in so many different ways. But, there are limited examples that are showing up in terms of documenting and looking at, videos taken of progress or problem areas, using AI to pinpoint where the problems are or the progress may be, much more quickly and efficiently than it's been able to be done in the past. And I think the growth in, improving, true construction on-site applications will be significant over the next few years. Excellent. Thank you, Ken. Michael, same question to you, sir. Sure. So I think, you know, what we're seeing that is available for us to use today as as construction industry, you know, owners is, the computer oriented work. Right? The accounting, the billing, the marketing work, the scheduling, all of those things. I think Christy pointed, many of those out. Right? So those things are available for us to do today as an industry and and to, you know, find efficiencies. Again, because labor is such a challenge. Right? So so that's that's day one. Right? Do that right now. What maybe we see in the future and I was talking to, a a GC about this just this morning, in fact, is, in the supply chain, really interesting point. You know, we have semi trucks and forklifts that are on the very verge of essentially being AI, capable. Right? So now when you show up to a a a supply chain, a a a a distributor, some place like that, a supplier. Right? If their guy's called off sick, it doesn't matter because that forklift, that semi truck may be AI enabled. Those things can get the job done. You're not having people, you're not having to worry about as many people loading concrete bags, loading. lumber, all those other things. So that's that, you know, that is on the horizon, if not just starting to appear. So that's where I would say we are going to be in the next next year, three years, etcetera. And then and then you go beyond there, and maybe the sky is the limit. But I don't see us, having humanoid robots swinging hammers anytime soon. Yeah. No. Fantastic. Thank you all for, those answers. We'll wrap it up. Richard, what what are your thoughts on this? Yeah. I think from an architect's perspective, I think the hype is that AI is going to replace architect an architect drawing or architectural judgment. A chatbot can certainly summarize an RFI, any coding implications. But at the end of the day, I think a human being is an experienced architect in particular, really is needed to understand the design intent and owner. expectations. Where I think the breakthrough is, though, in our work in the board survey back in March, we asked architects if, certain phases of the design stages were longer. or shorter. Pretty much all of them relative to the the the last five years are are running at about the same stage except for construction administration. So I think the next AI breakthrough, at least from an architect's perspective, is helping architects survive that that administrative complexity of delivering projects. Outstanding. Great great final thoughts from everybody on a question that's on, pretty much everybody's mind, certainly on most of the regs folks who registered for this webcast. Hey. That's it. That's all the time we have for now. You've got a QR code on the screen, and there's lots of resources. It's a goodie bag over there under docs, d o c s. The goodie bag is under the docs tab in your webcast screen. There are lots of links for a lot of great resources. I'll try to say thank you in here in the last, literally sixty seconds or less that we have. Thanks to all of our panelists. Once again, AGC's Ken Simons and Richard Branch from AIA. I can stroke connect colleagues, Christie Christie O'Brien, Michael Gucas, and Natasha Saladino. Of course, thank you. And, I'm very grateful that all of you spent part of your Thursday with us. Many thanks to all of our friends at AIA and HEC for their continued partnership. Our forecasting partners, 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. Amanda Moore, we couldn't do this without you. My sincere thanks to Johnny Braddigan, Jay Kennedy, Julie Riley, Mary Kicich, all the people I've forgotten today, and especially our senior manager for economic content and the managing editor for ConstructConnect News, Marshall Benveniste. My personal thanks to Anthony and Jen, and a final word of thanks to our presenting sponsor, ConstructConnect News. Please visit news.constructconnect.com for the latest on The US construction economy. Eighteen seconds left. Thank you, all of you that are still listening for joining us today. Until November, this is Paul Art with ConstructConnect wishing you a spectacular summer. Let's keep building.