Economist Urges Industry to Focus on the Positives

At the Glass Fabricator Conference (GFAB) 2026, held in Chicago, Illinois, June 14-17, Economist Richard Branch provided an economic outlook focused on the construction industry. Branch provided some insight on the 2026 economic landscape, which he says is "surviving, not thriving." The presentation highlighted the current pressures facing the construction industry, including higher prices, labor shortages and economic uncertainty. He predicted that rising oil prices will drive construction costs higher. 

“We are not technically in a recession, but construction has been flat, to down, at best,” says Branch. 

Looking at the positives 

Despite these challenges, there are positive signs, such as the resilience of sectors like K-12 school construction during past crises, like the 2008 recession. While construction spending has declined, there are notable exceptions in data centers and manufacturing.  

By segment, the nonresidential outlook was flat to start 2026, but data centers are growing “astronomically,” up from 5.4% to 6.7% between 2025 and 2026. Branch also said that growth in residential construction can help inform potential growth in other areas to come. For example, single family construction booming in one area means there's potential for educational, healthcare and commercial construction in the future since those are services the new residents will have demand for.  

While architectural billings and contracts have remained soft since 2022, inquiries are steadily increasing, according to the AIA. Renovation, rehabilitation,and historic preservation projects are also performing well, largely because building stock peaked right before 2006, Branch says. Those buildings, now 20 years old, increasingly need renovation. 

A K-shaped economy 

A K-shaped economy is defined as an uneven recovery from an economic downturn, where different segments experience different financial realities, splitting like the arms of the letter “K,” according to Encyclopedia Britannica. The U.S. economy is experiencing a K-shaped recovery, according to Branch, with some sectors thriving while others struggle. Key factors affecting construction include oil prices and tariffs. While rehabilitation projects and data center construction are performing well, office space and warehouse construction are not.  

Branch says there are three major shifts affecting the U.S. economy: cyclical (high rates and slow economic growth), structural (demographics and mobility), and policy (tariffs, immigration geopolitical concerns).  

“On one side, you have these massive affordability issues facing U.S. families, particularly younger families. On the other side, you see all this money in tech and AI. You get two different viewpoints on the economy,” says Branch. “Beauty is in the eye of the beholder. Your viewpoint on the economy, in large part, depends on what sector you’re in, whether you own a home, and where you live, among other factors, because some geographies are doing better than others.” 

Branch says the main cause of construction project delays and cancelations are client delays due to indecision on key issues. Earlier this year, when Branch polled architects on why projects are getting canceled, about 40% said market uncertainty was the leading indecision. As factors like oil costs, the war in Iran, and tariffs either get better or worse, those will impact the sense of market uncertainty and project delays/cancelations moving forward, he says 

What to do now 

Branch advised attendees to prepare for three scenarios: base case, upside, and the downside. For base case, assume that oil costs remain high until the fourth quarter of the year, tariff policies remain the same, and that there is no recession. The upside scenario would mean the federal government cuts rates as inflation abates, tariff rates fall, and oil prices come down in the second quarter. For the downside, be prepared for the federal government to raise rates to combat higher inflation, oil costs to remain high into first half of 2027 and higher odds of a recession. 

Branch says there are three numbers that you should check monthly to stay up-to-date on the construction industry’s economic status.  

1. One is the Architectural Billings Index. The ABI is a monthly economic indicator from the AIA, that is available for free every month at aia.org, that tracks the demand for design services at U.S. firms. A score above 50 means billings grew, a score below 50 means billings fell and a score of 50 means no change. 

2. Another number to watch is single-family permits. These stats have a 13-14 month lead on educational and retail construction. These numbers can be found through the National Association of Home Builders and the U.S. Census Bureau. 

3. Lastly, he recommended staying up to date on Brent crude oil price. Brent crude is a global benchmark for crude oil prices. As mentioned earlier, the cost of oil will impact construction spending. This information can be found on multiple national new networks, or from the U.S. Energy Information Administration.