The economy grew at a stronger than expected pace in the third quarter. The Gross Domestic Product (GDP) surged to 4.9%, an increase from 2.1% growth in the second quarter. Robust consumer spending fueled growth as Americans opened their wallets on things like concerts, movies, and vacations but increases were seen across almost all sectors.

While a soft landing scenario is becoming more plausible, several factors are still weighing on the outlook: the labor market is showing signs of cooling, labor strikes and instability stemming from a potential government shutdown, the resumption of student loan payments and spiking energy prices eating into budgets, tighter financial conditions and a federal funds rate that becomes more restrictive as inflation retreats, further dampening interest-sensitive sectors of the economy such as housing, auto sales, and privately-financed commercial real estate activity.

On the construction front, material costs have largely stabilized though we are still seeing some volatility in categories such as concrete and diesel fuels. We continue to see labor shortages as the biggest frustration for General Contractors and though government funding programs are providing support for manufacturing construction, the multifamily, commercial and office sectors are experiencing more headwinds as funding gets harder to come by.