The data released this week [July 28, 2025] that stagflation is now here. It suggests a near-term future of higher inflation in the context of a weakening economy and job market. This makes policy decisions on interest rates more difficult. The urgency to cut rates carries more weight in the context of the weakening of the labor market.

Two reports released recently suggest single-family construction may be headed for a larger correction than many expected. Even though the builder confidence in NAHB Homebuilder Confidence for July 2025 showed a one-point improvement, it now stands at 38 – extremely pessimistic.

With the passing of OBBBA (One Big Beautiful Bill Act), the Department of Homeland Security (DHS) allocated $46.5 billion for “physical barriers” along the Mexican border including walls, fencing, pedestrian and vehicle barriers, security access roads, and surveillance equipment. As The Sullivan Report notes, one aspect of OBBBA is how the building of The Wall will have a positive impact on the 2025 - 2030 economic forecast for cement and concrete consumption.

Even if rate cuts materialize at the September 2025 FOMC meeting, given lags, the impacts probably won’t materialize until after the peak construction season (April thru August) has passed. If so, real private construction will take a step back in 2025.

The Sullivan Report’s updated 2025 forecast reveals a darker outlook for single-family construction - citing higher interest rates, a weakening job market, and growing economic uncertainty. As a result, projected declines in U.S. cement and concrete consumption have deepened compared to its Spring forecast.

Compared to a consensus expectation of 100,000 net new private sector jobs, the ADP National Employment Report showed a decline in 33,000 jobs in June 2025 with the weakness concentrated in the service sector. Construction recorded a 9,000-jobs gain.

Few economists expect he Federal Reserve to cut the federal funds interest rate this week at the upcoming FOMC meeting. Most expect the Fed cut will occur at the September meeting. However, those assumptions are being reconsidered. The possibility of no Fed rate cuts this year is now on the plate for analysis. Recent survey of economists puts the odds of a September cut at 100%. The one thing I know is, if 100% of economists agree on something, bet against it.

Harsh tariff talks prompts some to expect an economic downturn. Unfortunately, this may all be the calm before the storm. Prospects of tariffs will disrupt an already fragile economic growth path. Other factors weighing against near-term growth include a weakened dollar, aggressive illegal immigration control, pauses in funding on government contracts, and looming increases in federal debt.