Data center construction, the Strait of Hormuz and that tenacious labor shortage are all top of mind for contractors this quarter.

On April 8, 2026, Anirban Basu, chief economist for Associated Builders and Contractors, gave his first-quarter economic update and forecast and the outlook is mixed. While the supply chain is posing more problems for contractors than it did in December, backlog has increased by five percentage points; while profit margins are expected to increase incrementally, the workforce shortage is still causing major impacts; while AI and data center discussion continues to run rampant, a new talking point reveals itself in the war with Iran.

Basu covers all of these points—and more—and how they affect the construction industry, per sector, per per state, per region and as a whole. But regardless of the industry, the bottom line remains steadfast: The U.S. needs lower interest rates.

POLLS

Which of these is the leading challenge for your company today?

Over the last three months, how has your company’s backlog fared?

Where do you expect your company’s profit margins to be a year from now?

QUOTES

“If I made this presentation yesterday it would be a lot more pessimistic (in reference to the stock market jump and the ceasefire in the Middle East).” 6:00

“People are in such a foul mood…some of that is politics, but most of that is prices keep rising rapidly.” 7:00

“Interest rates are going to be higher for longer.” 10:37

“Significant segments of the U.S. economy continue to perform quite well.” 13:00

“Last year the hyperscalers in the aggregate spent $450 billion on AI infrastructure; latest estimates are between $700-725 billion.” 15:00

“There are some recent indications in slowing in economic activity.” 25:00

“The economy is still growing; we’re not in recession.” 26:00

“Job growth has become more erratic.” 27:00

“Silicon valley—fine; Wall Street—fine; Main Street—a little rocky.” 39:00

“A lot of people are back in the office five days a week.” 45:00

“State and local governments will be asked to spend more on infrastructure financing.” 52

“One industry stands out in terms of wage growth not slowing and that is construction.” 51:30

“We need lower interest rates.” 55:40

THINGS TO NOTE

The U.S. South is growing; more people are moving to Texas and out of California than to and from any other state; but, overall, Americans are moving less than they have in recent decades.

Artificial intelligence and M&A activity is booming.

Layoffs at construction companies are down; they aren’t letting people go because they’re desperate for talent.

Class-A architecture in large markets is mainly where office vacancies are (i.e. San Francisco) and many of these buildings are losing value; AI is poised to push these vacancies higher, with its ability to replace entry level positions like computer programming.

Q&A

Questions focused heavily on data center spending and construction; some focused on the war in the Middle East, especially when considering today’s ceasefire and the intended opening of the Strait of Hormuz. There was minor focus on nuclear power, as well as mergers and acquisitions. There were no questions on tariffs.

View the full recording here.

SEE ALSO: DATA CENTERS, TARIFFS, INFLATION, OH MY: ANIRBAN BASU ON CONSTRUCTION ECONOMY AT YEAR’S END