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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.

Regardless of political preference or tariffs, shifting immigration policies stand to have a strong impact on the labor market conditions facing the construction industry as well as hospitality and agriculture. This can increase the shortage of construction workers, projects initiated, pricing, and market economics overall.

Immigration and tariffs may make the cost of building a new home even more expensive – worsening the near-term affordability difficulties facing home buyers. First-time homeowners are currently at the lowest level ever.

The Federal Reserve Dual Mandate is to maintain stable inflation and low unemployment. Unfortunately, today’s economy is characterized by both increases in inflation and unemployment. Stagflation is when economic growth turns negative. Raising rates too fast could result in recession. Lowering them too quickly could result in inflation. Fed policy can address one – not both.