b'18 Economic Updatecontinued from pg.17to five-plus years ago are loath to surrenderthink well see less multifamily construction their sub-3% mortgages. in 2026, said Conerly. Vacancy rates are going up and rents have been coming down Mortgage rates have an important impact onat the rate of about one percent a year.the consumer attitudes that are vital drivers of the economy. While lower short-term ratesMeanwhile, contractors attached to the may be coming from the Federal Reserve,commercial, office and hotel markets are its unclear how much effect they will havefeeling the sting of a slowing economy, on the longer-term ones that apply to thehigh interest rates, and an environment funding of new homes. I do not forecastrife with uncertainty. Many areas of non-mortgage rates coming down enough toresidential are trending flat or edging down, make a big difference in single-familysaid Conerly. Even the chip fabs, while still construction, said Bill Conerly, Principalstrong, are tapering down.of his own consulting firm in Lake Oswego, Oregon (conerlyconsulting.com). The one bright construction sector: data centers. They show no signs of diminishing Wary builders. Reluctant sellers. Sluggishand are big customers for electricians, buyers. Its all having an effect on theplumbers, and suppliers of scaffolding and housing market. Oxford Economics expectsmanufactured products of all kinds. When I starts to fall by 4.3% in 2025 and declinelook at the detail and the economic statistics by another 2.3% in 2026 after dropping byof what kind of capital equipment is being 3.5% in 2024. Prices for existing homes arebought, I am seeing a lot of data center-related expected to increase only 1.5% in 2025 andequipment in there, said Conerly. Data Dedicated to keeping its members at the forefront in their industry2.3% in 2026 after rising by 4.4% in 2024.centers also require a lot of garden variety wiring, connectors, and plumbing for cooling.Concerned about the rising cost of living, consumers are cutting back on spending ofEvery sector of the construction industry all kinds. Their hesitancy affects the retailshares a common challenge: labor sector, which is an important driver andavailability. Oxford Economics forecasts an bellwether of the economy. Our forecast forunemployment rate of 4.4% and 4.3% at the year-over-year retail sales growth is 3.8%end of 2025 and 2026, respectively. Thats for 2026, down from the 4.5% of 2025, saidnot much higher than the 4.1% clocked at Scott Hoyt, Senior Director of Consumerthe end of 2024. Low unemployment, largely Economics for Moodys Analytics (economy. due to slowing growth in the nations working com). Much of the increase in both yearsage population and aggressive immigrationis due to inflation. High prices are a bit ofpolicies, can result in rising labor costs.a mixed bag, said Hoyt. They undermine consumer purchasing power and confidence,Business confidencebut they also support nominal sales by liftingFor all business sectors, money and labor are the prices of the goods retailers are selling. not the only production factors on the rise. The real problem is the world has become Construction woes much more expensive in the last few years, Outside of the single-family home market,noted Basu. Construction materials are more contractors are having problems of theirexpensive. And of course there are tariffs on own. Multifamily builders, working throughitems like steel, aluminum, and copper. a backlog of units under construction, are hesitant to break ground on new ones. ILittle wonder the high cost of doing business The InsulatorJanuary 2026'