FMI 2Q Outlook Looks Ahead to 2030
Key Highlights
-
Overall spending is flat after a 1.4% decline in 2025;
- Total construction put-in-place should rebound in 2027 and then accelerate beyond $2.7
trillion by 2030; -
Data centers are the standout growth driver, now accounting for more than half of private office construction;
- The Iran war is a key wildcard, pushing oil prices higher and increasing inflation expectations, materials costs and mortgage rate pressure.
Executive Summary (excerpt)
Total U.S. engineering and construction spending is forecasted to remain essentially flat in 2026 at just under $2.2 trillion, following a 1.4% decline in 2025 and a sharp deceleration from 7% growth in 2024.
Total construction put-in-place has declined seven times since 1964. In every previous instance, the decline was tied directly to a national recession or its aftermath. The 2025 decline broke that pattern.
For the first time in more than 60 years, construction contracted outside of a recession, driven instead by its own fundamentals: elevated interest rates, tighter lending standards and pipeline exhaustion. The warning signs were visible well in advance. Leading economic indicators, yield curve signals, rising unemployment and tightening credit conditions all pointed to mounting stress before the spending data confirmed it.
What made 2025 unusual was not the weakness itself, but where it occurred. Construction turned down while GDP continued to expand, supported by services, technology and government investment. The industry entered a downturn that the broader economy did not
FMI’s Q2 2026 forecast shows total construction put-in-place roughly flat at $2.16 trillion in 2026 before recovering to $2.25 trillion in 2027 and then accelerating beyond $2.7 trillion by 2030. The direction improves, but the starting point remains fragile.
Construction is entering this recovery from a weaker foundation than in any cycle in the modern data set; and the outlook still depends on rate relief, lending normalization and some reduction in an unusually complex mix of geopolitical and trade policy uncertainty, from the Iran conflict and its effects on energy markets to Section 232 tariffs on steel, aluminum and lumber.
The conditions for renewed construction spending growth were laid out last year. Whether they arrive quickly enough to prevent additional near-term erosion remains the central question for 2026.
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