Economic analysis
Reading the Road Ahead
GDP growth
2.0%
Inflation (CPI)
3.3%
Materials and Commodities
3.0%
Labor costs
3.0%
The US economy is growing at a steady pace in early 2026, with conditions improving since late 2025. However, cost pressures remain, as inflation and higher costs continue to affect businesses and weaken some projects.
GDP grew by 2.0% in the first quarter of 2026. This was up from 0.5% in late 2025. Higher investment, public spending, and exports supported the increase. Even so, the recovery follows a weak second half of 2025. Growth remains uneven and sensitive to policy and global risks.
Inflation rose to 3.3% in the first quarter of 2026, up from 2.7% in the previous quarter. While this is below the highs seen in recent years, inflation remains above long-term targets. Energy prices, tariffs, and supply chain pressures continue to influence price growth.
At the same time, construction costs are increasing again. Material and commodity prices increased by 3.0% in the first quarter, up from 1.2% in the previous quarter. Tariffs and global market pressures were key drivers. Labor cost growth also remains high at 3.0%, although this is down from 4.3% in late 2025. This shows that wage pressure is easing, but remains high, and it still adds to overall cost growth.
Global outlook
Stability on paper, uncertainty in practice
Construction Costs:
Aluminium
+12.2%
Steel
+6.9%
Copper
+5.8%
US trade policy is pushing up construction material costs in 2026, especially for steel, copper, and aluminum. Although these tariffs apply to imports, they are also pushing up prices across the domestic market. Higher import costs reduce price competition. This allows domestic producers to raise prices, pushing costs higher across the US supply chain.
Following a Supreme Court ruling on February 20, the US introduced a 10% import duty on most goods entering the country. At the same time, the government expanded Section 232 tariffs to as much as 50% on some metal-intensive products. While some exemptions remain, these measures are increasing cost pressures across both imported and domestically sourced materials.
As a result, key construction inputs have seen upward price movement year-to-date, with aluminum rising 12.2%, steel 6.9%, and copper 5.8%.6 This shows how tariffs on imports are also pushing up costs across the wider US construction market.
While conditions in the Middle East have improved, uncertainty remains and is adding to tariff-related escalation in the US construction industry in 2026. In response, many clients are securing high-risk materials and contractor capacity earlier, while maintaining flexibility in design and material selections. There is also a growing focus on collaborative approaches to managing cost and market risk, rather than transferring volatility entirely to contractors. This can help reduce risk premiums and lower total project costs over the life of a project.
Read more on the impacts to both US and global markets here.