economic outlook
MICA MESSENGER
39
T
he construction industry can 
look forward to a gradually 
improving, if challenging, 
operating environment in 2026. 
“The US economy is holding 
up admirably well despite a major trade 
shock caused by tariffs,” said Bernard 
Yaros Jr., Lead U.S. Economist at Oxford 
Economics (oxfordeconomics.com). 
“We look for an acceleration in growth 
in 2026 as stimulus from the One Big 
Beautiful Bill gets underway.”
Oxford Economics expects real GDP to 
grow by 2% in 2026, up a bit from the 
1.7% expected when 2025 numbers are 
finally tallied. Both years, among the 
most sluggish growth environments of 
the past decade, are underperforming 
the 2.8% increase of 2024. 
(Gross Domestic Product, the total value 
of the nation’s goods and services, is 
the most commonly utilized measure of 
economic growth. “Real” GDP subtracts 
the effects of inflation).
Higher profits
The nation’s economic growth depends 
largely on the launch of new business 
initiatives. Unfortunately, companies are 
holding back for a number of reasons. 
Interest rates, while declining, are still at 
the highest levels since 2022. Costs for 
materials and supplies are increasing. 
There is uncertainty about the nation’s 
future trade policy. Lower and middle 
income consumers, nervous about 
inflation, are tapped out and closing 
their wallets. Against such headwinds, a 
host of otherwise attractive projects can 
look less promising.
One might also expect business 
profitability to suffer. Yet Oxford 
Economics expects it to follow the 
same general pattern as the GDP. “We 
look for corporate profits to rise by 
4.9% in 2026,” said Yaros. “That’s up 
substantially from the 0.5% expected 
when 2025 numbers are finalized.” 
Even so, the 2026 pace remains slower 
than the 7.9% clocked in 2024.
The expected 2026 rebound in 
profitability stems from a belief that 
stimulus from Washington will lift all 
boats. “We believe the passage of the 
One Big Beautiful Bill, with its tax cuts 
for businesses and households, should 
help the economy regather some steam 
in early 2026,” said Anirban Basu, 
Chairman & CEO of Sage Policy Group 
(sagepolicy.com). The legislation’s 100% 
bonus depreciation should help fuel 
business investment, while large tax 
We look for 
corporate profits 
to rise by 4.9% 
in 2026,” said 
Yaros. “That’s 
up substantially 
from the 0.5% 
expected when 
2025 numbers are 
finalized.
MICA MESSENGER
39

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