Growth projections for the U.S. construction industry have taken a hit due to economic turbulence that has led to disruptions, putting some projects on hold, according to JLL’s mid-year 2025 construction perspective. Construction schedules are uncertain, costs are difficult to predict and worker shortages are compounding an already difficult employment market for the industry.
Policy outcomes will likely become clearer, but sluggish starts now will have a lasting effect on construction. Forward-thinking organizations are already solidifying revised capital plans and are implementing flexible approaches to procurement, labor sourcing and project timelines, said JLL.
The tariff situation is a primary driver of uncertainty in the construction market as the supply chain for materials is in flux. The extent of the impact varies by sector, material category and market, a trend that will continue throughout the year, said JLL. Tariffs also will create new trade patterns and could diminish the role of the U.S. in global trade, which could have lasting impacts on construction, the report said.
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Meanwhile, the industry faces pressure from immigration policy, including federal deportation efforts that sometimes occur on job sites. This has caused absenteeism and project delays on existing projects and could have a chilling effect on future work capacity, said the report.
With limited immigration expected going forward, the construction industry, which has long relied on foreign-born labor, will face increasing challenges as project levels return to normal. For now, the impact of limited immigration and accelerated losses will be moderated by slower activity, the report said.
Geographic variation in enforcement will reshape project viability, timelines and wage premiums, said JLL.
“This workforce rebalancing will shift development patterns, particularly impacting future growth in Texas as well as disaster recovery in California and Florida,” said the report.
Amid this economic turbulence, private investment will return to the market unevenly as stakeholders assess changing priorities and public support, which could limit construction demand.
“As disruptions vary significantly by sector and location — with select industries maintaining robust activity — the underlying impact is more complex, said JLL. “Critical sector investments ensure opportunities remain, though delays will alter their shape and timing.”
Costs are on pace to see significant increases over the next six months due to trade policy upheaval. The report predicts uneven pricing effects based on regional pipelines, production access and sensitivity. Sectors are not equally exposed to increases. For example, mechanical and electrical components needed for advanced building systems are disproportionately imported. Coordinated demand for these components that are critical to data centers and other active sectors will push costs higher as existing stockpiles diminish.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
