How the U.S. Presidential Election Results Will Impact Construction Industry Growth

As the U.S. prepares for a new administration under President Trump, the construction industry braces for shifts that may influence ongoing policies in infrastructure, labor, and environmental standards. The $2.1 trillion U.S industry provides jobs to more than 8 million Americans and has always responded to changes in presidential policies and administration.

The new administration will bring changes to many construction segments. These changes will affect everything from housing markets to commercial building standards. Our team’s analysis points to new directions in infrastructure spending, regulatory frameworks, and sustainability requirements. These developments will transform how residential, commercial, and industrial construction projects are planned and executed.

Immediate Policy Changes Affecting Construction

The most important policy changes are revolutionizing our construction industry. These changes will transform how we operate in the coming years.

Regulatory Reform Expectations

With Trump’s emphasis on deregulation, the Associated Builders and Contractors (ABC) anticipate policy shifts that could streamline permitting processes, reduce compliance costs, and favor free enterprise over regulatory oversight. Expected changes could involve a rollback of workplace inspection protocols and contractor recognition requirements, which would allow contractors more operational flexibility.

Key regulatory changes include:

• Revised project permitting processes
• Modified workplace inspection protocols
• Updated contractor recognition procedures

Environmental Policy Shifts

New administration might roll back recent environmental requirements, allowing for more flexibility in material sourcing and emissions reporting. While whole-life carbon assessments and energy efficiency standards are in place now, a shift in the administration may ease these requirements, potentially lowering operational costs for construction firms but also altering sustainability commitments.

New requirements now cover:

• Whole-life carbon assessments
• Better energy efficiency standards
• Eco-friendly material selection protocols

Labor Law Modifications

Labor law modifications, such as the planned minimum wage increases and new union recognition procedures, could face delays or revisions under Trump, who has historically prioritized business interests over regulatory changes that raise labor costs. This could relieve some immediate wage pressures on construction firms but may also reignite debates over worker rights and representation.

Our industry faces a labor shortage of more than 500,000 people. These policy changes will affect project pricing and scheduling in construction sectors of all sizes. This shortage makes these new policies crucial for our workforce development strategies.

Infrastructure Investment Landscape

The US infrastructure landscape shows an unprecedented federal investment through major legislation. The Infrastructure Investment and Jobs Act (IIJA) has set aside $1.20 trillion for infrastructure projects between 2021 and 2026. About $492 billion still remains to be distributed.

While the IIJA remains in effect, a Trump administration may prioritize a redirection of unallocated funds toward projects with strong private sector involvement. Public-private partnerships (P3s), which align well with Trump’s pro-business stance, could see accelerated approvals, especially for large-scale transportation and energy projects that attract private capital.

Federal Funding Priorities

Federal funding deployment patterns have changed dramatically. New recipients secured $2.15 billion in IIJA obligations through 1,326 projects in 2023. This number dropped to 542 recipients with $325 million in early 2024. The fund utilization faces several challenges:

• Only 9% of contractors work on IIJA-funded projects
• 6% have won bids without starting work
• Buy America rules create implementation delays

State-Level Project Impacts

State jurisdictions show different levels of progress. The industry benefits from state and local funding opportunities with additional federal support. Projects work best when states combine local initiatives with federal resources. Manufacturing construction spending has doubled since IIJA’s implementation.

Public-Private Partnership Opportunities

Public-private partnerships (P3s) have reshaped the infrastructure landscape. These partnerships work well for large, complex infrastructure projects. Success stories include:

• The Goethals Bridge in Staten Island
• LaGuardia Airport Terminal B redevelopment
• Clackamas County Courthouse – Oregon’s first availability payment P3

P3s continue to grow as they offer better risk management and faster project delivery. Private sector involvement brings expertise and additional funding sources for critical infrastructure development.

Market Sector Analysis

The construction market shows radical alterations in residential, commercial, and industrial segments as builders adapt to new political realities.

Residential Construction Outlook

The residential construction sector faces tough challenges. New construction activity has dropped 13% compared to last year. Housing initiatives now dominate the agenda with plans to build three million new homes in the next decade. Developer tax incentives could boost affordable housing construction in economically struggling areas.

Commercial Building Trends

Commercial real estate demonstrates resilience. Manhattan’s leasing activity grew 16% in the first half of this year compared to earlier periods. Election years historically show stable office leasing patterns with only a 0.9% decrease versus non-election years. The market shows concerning signals:

• Office sector CMBS delinquencies have reached 11%
• Urban centers report highest-ever office vacancies
• The sector faces a $1 trillion debt wall next year

Industrial Project Forecasts

Industrial construction continues to expand. Clean energy and manufacturing initiatives lead this growth. The Inflation Reduction Act has sparked $123 billion in new clean-energy investments across 305 projects. Major investments include:

• $81 billion in electric vehicle manufacturing
• $41 billion for battery and energy storage facilities
• $55 billion in grant awards for semiconductor manufacturing

The investment landscape has shifted geographically. North Carolina, South Carolina, and Georgia attract 40% of planned investments. These southeastern states offer better construction permitting processes and lower labor costs.

Economic Implications

The construction world faces new economic realities as we examine what the presidential election results mean for our finances. Economic indicators point to changes that will affect our industry’s future.

Interest Rate Effects

A game-changing moment arrived with the Federal Reserve’s recent 0.5 percentage point rate cut. Construction loan rates have started to adjust. Builders and developers can expect loan conditions to improve by 25 to 50 basis points in the coming weeks. These changes matter because:

• Project financing costs continue to drop
• Builders can access loans more easily
• More investment equity becomes available

Material Cost Projections

Material costs show worrying trends. Construction materials’ prices have jumped by an average of 19% since 2020, affecting 82.5% of all materials. Our research shows mixed signals – some materials cost less while others keep getting more expensive:

Material Category – Projected Annual Change

Concrete  -1% to -2% through 2025

Wood/Plastics – Up to 6.5% increase

Thermal Protection – Up to 6.5% increase

Trade Policy Impact

Under Trump’s ‘America First’ approach, proposed tariffs on imported materials, particularly from China, could raise material costs, affecting construction budgets across sectors. While such tariffs are intended to boost domestic production, they could lead to increased material expenses and drive inflation within the construction supply chain. This raises concerns since material costs already sit 39% above pre-pandemic levels. Trade-related inflation could push interest rates higher too.

Our industry faces tough challenges from uncertain material, production, and overhead costs. Construction companies’ profit margins shrink as costs rise and supply chains remain disrupted, making profitable operations harder to maintain.

What Trump’s Victory Could Mean for US Construction

Navigates ongoing changes, just like in construction. As it adjusts to new rules and market shifts, they need creative methods to handle increasing expenses and keep profits too. Smart alliances, good supply chain handling, and adopting green construction are key to succeed in the long-run. Even with hurdles, it stays strong and ready to grow, boosted by continuous infrastructure funding and the want for new, eco-friendly buildings. With mindful planning and adjusting, these companies can flourish in this lively atmosphere and aid in further expanding this already $2.3 trillion industry.

Conclusion

With Trump’s renewed focus on deregulation and infrastructure, the $2.1 trillion construction industry is poised to navigate a landscape of both opportunities and challenges. Companies prepared to leverage a pro-business environment, particularly in infrastructure and large public-private projects, may gain a competitive edge. As regulatory and trade policy shifts unfold, strategic planning will be essential for firms aiming to thrive under Trump’s policy direction.

Different market sectors tell different stories. Residential construction has taken a hit with a 13% downturn. Industrial construction runs on clean energy investments that exceed $123 billion. Commercial real estate remains strong even with high vacancy rates and growing debt concerns.

The industry’s economic landscape presents both opportunities and hurdles. The Federal Reserve’s recent rate cuts should ease construction financing burdens. However, material costs stay high across 82.5% of categories. New trade policies and potential tariffs might spark another round of cost increases that could squeeze profit margins.

This industry stands at a turning point. Companies that know how to handle regulatory changes, tap into infrastructure funds, and direct their way through economic pressures will thrive. The construction sector’s core strength and vital role in America’s economy make it well-positioned to tackle these challenges head on and come out stronger in the coming years.