‘Ladies and Gentlemen, This Does Not Mean Recession’: Anirban Basu on State of 2025 Q3 Construction Economy

Basu’s newsletter stated that construction has been in contraction for 14 months, so why does he seem relatively upbeat this quarter?

In his Q3 Construction Economic Update and Forecast webinar, ABC Chief Economist Anirban Basu presented metrics on U.S. economic conditions, the U.S. labor market, effects of Trump admin policies and more. While some stats don’t ostensibly indicate a recession is imminent, there is of course always risk. Nevertheless, contractors and Basu himself remain optimistic.

POLLS

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

October 2025

Supply chain and/or materials issues 6
Skills / worker shortage 46
Insufficient demand for construction services 20
Availability of financing for projects/project work 16
None of the above 8

July 2025

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

October 2025

It has risen considerably 10
It has risen slightly 19
It has remained about the same 32
It has declined slightly 29
It has declined considerably 10

July 2025

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

October 2025

Substantially higher 4
Slightly higher 27
About the same 34
Slightly lower 31
Substantially lower 4

July 2025

U.S. ECONOMIC CONDITIONS

“In the third quarter of 2025 the us economy grew.” (4:30)

“Where are consumers spending? Services, including travel, look at people passing TSA checkpoints; Canadians are not coming to America as often.” (5:30)

“Nonresidential fixed investment is up.” (6:30)

“We weren’t buying imports and merchandise.” (7:30)

“The economy is still growing, don’t get me wrong.” (8:30)

“Among the things not being purchased are inputs to construction and construction equipment.” (14:12)

“The wealthy have never been wealthier. I suspect that many other consumers are struggling right now, where is that pressure coming from? Inflation.” (14:56)

“This is the key issue for contractors going forward: interest rates.” (16:40)

“Last month they reduced rats by a quarter percent, and they are indicating they will do so again in December, but the stock market was not expecting that.” (18:40)

“The word I keep hearing over and over again is uncertainty, people are uncertain.” (22:00)

U.S. LABOR MARKET

“This is where you will see evidence that the U.S. economy is in fact softening.” (24:16)

“We now have more unemployed Americans than job openings.” (24:42)

“U.S. job openings tumbled to a 10-year low in August 2025.” (25:40)

“Who has been the leader here? The South [On employment growth rates in the 25 largest metro markets]. Who’s number one here? Minneapolis. Why the Midwest you ask? [On construction employment growth rates in the 25 largest metro markets]. The Midwest has been quite good at attracting data centers and major manufacturing facilities. (33:00)

“This is the worst job market in recent memory for recent college graduates.” (33:33)

HOUESHOLD FINANCES

“Many Americans have spent down their savings.” (34:19)

“One-third of people with student debt are delinquent on that debt.” (35:46)

TRUMP ADMIN POLICIES

“Encounters at the southern border are massively down.” (37:43)

“Fewer Americans are moving right now anywhere.” (47:31)

“About one in eight contractors in our survey indicate they are working on a data center project. The average backlog is 12 months. Those contractor not working on a data center—their backlog is eight months.” (51:14)

“We need more power whether in the form of smaller nuclear plants or whatever [On data center power consumption].” (53:30)

“One of the reasons the backlog has held up is we have this AI infrastructure spending boom.” (54:00)

“We’ve been seeing reshoring in this country since at least 2010 pick up, [On the manufacturing boom since February 2020] but maybe the tariffs are not speeding up reshoring like we thought they would.” (56:00)

OUTLOOK

“More of you are saying your margins will be thinner going forward.” (61:25)

“Here’s my suspicion: Disproportionately we receive responses from contractors who are doing well.” (62:30)

“I am surprised our contractors remain so upbeat especially in terms of profit margins when there are so many reasons to be concerned.” 63:00)

“But risk of recession is high right now because recovery and expansion is so narrowly founded right now.” (64:06)

“Forecast is for growth in 2025 but there are still risks.” (65:41)

QUESTIONS

The Q&A centered around data centers, workforce issues (and immigration), effects of the Big Beautiful Bill, the market boom in the South, recent interest rate cuts and more. To hear Anirban’s take, on each of these items, view the full recording here.

Plus, take a look at where the industry stook in Q3 of 2024:

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