While inflation and supply chain issues have seen some improvements, labor remains a key issue, said Basu, which he attributed in part to people being forced to leave the workforce due to lack of childcare. “If you can’t afford daycare, you end up staying at home,” he said. “If you can’t find a job that offers you remote work, you’re out of the workforce.”

Non-residential construction spending rose 1.5% overall during between the start of the COVID-19 pandemic in February 2020 and October 2022, according to the U.S. Census Bureau. Manufacturing spending has risen 44%, while water supply and commercial work are up 35.4% and 25.3%, respectively. Hotel construction, hurt by the pandemic, is down 40.6%.

Adjusted for inflation, non-residential construction spending is down 11.8% in the same time period. Basu said many firms have told him they are operating at capacity. “Capacity to deliver construction services, at least in parts of the country, must have shrunk” due to lack of an available workforce, he said.

Looking to 2023, Basu expects interest rates, which have been rising for the past several months, to push the economy into a recession. He also noted that while the supply chain has been improving, the situation in Ukraine as well as the zero-COVID policy in China could create further issues.

Still, he adds, “I don’t think this is going to be a very deep recession, [or] a very protracted recession. Nothing like 2008.”