FMI Corp.’s latest North American Engineering and Construction Outlook paints a mixed picture for 2026, with overall spending expected to hold steady but performance varying widely across the industry.
Total U.S. engineering and construction spending is forecast to come in at just under $2.2 trillion in 2026, essentially flat after a 1.4% decline in 2025 and a sharp slowdown from 2024’s stronger growth. FMI characterizes the current environment as a “sector-specific recession,” where parts of the construction market are contracting even as the broader economy continues to grow.
Several factors are contributing to the slowdown, including high interest rates, tighter lending conditions and fewer projects moving through the pipeline. Not all segments are moving in the same direction. Eight of 19 construction sectors are expected to decline, while a smaller group continues to carry the market.
Infrastructure remains one of the more stable areas, particularly in water, wastewater and power, supported by federal funding and long-term demand. Data centers are another bright spot, continuing to drive activity as demand for digital infrastructure grows.
At the same time, global uncertainty is adding pressure. Rising oil prices and ongoing geopolitical tensions are contributing to higher material and transportation costs, making some projects harder to pencil out.
According to FMI Chief Economist Brian Strawberry, the current environment is pushing contractors to be more selective about where they invest and which projects they pursue.
