b"THE OFFICIAL NFBA MAGAZINENational figures concur. The Employment Cost Index (ECI)The road aheadis slowing, said Hoyt, referring to a common measure of average worker wages. We are forecasting 2.8% growth inDespite optimism on the part of businesses and consumers, 2025, compared to 3.9% in 2024 and 4.5% in 2023.economists eye some dark clouds on the horizon. In the opening months of 2025, they advise construction companies Despite the ongoing de-escalation in the ECI, Hoyt said itand manufacturers to keep a close watch on the following remains healthy enough to support consumer spending,areas for any deleterious changes:as does the expected increase in the nations total personal income level, an important driver of business activity. Like# Interest ratesthe ECI, it is expected to follow a familiar 2025 trendline: aGoing forward, the major concern for businesses will be healthy increase despite de-escalation. Mainly because ofthe pace of interest rate cuts and where they will end up, ECONOMIC UPDATEslower job growth, we have the increase in wage and salarysaid Yaros.income slowing to 4.5% in 2025, compared to our expectation of 4.8% for 2024, and 5.9% for 2023, said Hoyt.# Inflation Maybe its a looser labor market, but employers are in noIf the consumer price index returns to positive territory, that hurry to trim their employee rosters. Employers want tocould throw a monkey wrench into many business plans, maintain their ability to jump on the growth side once thesaid Conerly.economy rebounds a little, said Hoyt. So employment levels# Tariffshave held fairly steady.Tariffs amount to price increases for our members who have Supply chains to buy materials from abroad, said Palisin. Constructioncompanieswillbenefitfromanational# Geopoliticscommitment to reposition supply chains in the UnitedAn increasing level of turmoil around the world can disrupt States. Logistical issues are persuading many CEOs to placesupply chains, throwing a monkey wrench into the economy, production closer to final consumers, said Basu. There issaid Conerly.also a trend toward favoring nations that provide significantConcerning as these risks are, economists anticipate a fairly protection for intellectual property. benign operating environment in 2025. The US economy Indeed, many contractors are concerned about the re- has been remarkably resilient despite all the hits its taken emergence of supply chain issues. It's taking longer toover the past few years, said Yaros. We dont anticipate a ship equipment around the world, in part because of issuesrecession, as the Federal Reserve will be dialing back the in the Red Sea, said Basu. Cargo is being diverted andrestrictiveness of monetary policy, and there are no glaring having to travel much longer distances in many instances,imbalances in the economy.especially cargo from Asia. That leads to increases in the cost of transportation and insurance, which squeezes marginsPREPARE FOR A SOFT LANDINGfor contractors.U.S. GROSS DOMESTIC PRODUCT (GDP) Palisin confirmed that supply chain disruptions are not a thing(ANNUAL % CHANGE)of the past. We are seeing shortages around semiconductor chips and some other technological products, as well as2014: 2.5%chemicals, equipment assemblies and metal parts. Thats2015: 2.9%causing production delays and late deliveries. 2016: 1.8%There are a number of causes for the problem. Over the past2017: 2.5%year the nation has lacked sufficient skilled workers to meet2018: 3.0%production demands. And in an environment of high interest2019: 2.5%rates and slowing growth, companies did not invest as much as2020: -2.2% required in new facilities. As for the semiconductor situation2021: 5.8%specifically, there's this huge demand coming up against a2022: 1.9%shortfall in global supply, said Palisin.2023: 2.5% While the U.S. is committed to the reshoring of production,* 2024: 2.6%the task of increasing domestic manufacturing and delivery* 2025: 1.9%systems will take time. We are not going to turn things* 2026: 2.1%around right away, said Palisin. MODEST GROWTH IN THE NATIONS ECONOMY WILL SUPPORT BUSINESS PROFITS IN 2025.SOURCES: WORLD BANK; * = PROJECTIONS BY OXFORD ECONOMICS.18 / FRAME BUILDER - VOL5 6"