Engineering Outlook & Political Uncertainty

To the ACEC Community,

Last week, the ACEC Research Institute released its Engineering Business Sentiment Survey for the first quarter of 2026. The Institute collected data from more than 600 member firm executives, asking them to weigh in on the current state of their firms, the engineering industry, and the economy as a whole.

The survey's findings show an industry that is doing well and expects that to continue. The Institute uses a Net Rating methodology, which is calculated by subtracting the negative ratings from the positive ones. The higher the number, the stronger the sentiment. When asked about their own firm’s finances, respondents came back with a +82 Net Rating. That represents a slight dip from Q4 of 2025, which came back at +84, but the narrative continues to be that our firms are currently doing well. Respondents also expressed optimism for the future of their firms (+36). That rating has steadily improved since a tariff-driven decline in the second quarter of 2025, when it dropped to +17, but it still represents a dip from its +53 rating in Q1 2025.

Future sentiment for the condition of the U.S. economy rose seven points from last quarter. It’s now at +3—back in positive territory after scoring a -29 in Q2 2025. (Again, tariffs.) The good news is that tariff concerns have eased, with 43 percent of responding firms worried about their impact. More good news: concerns about a looming recession also have lessened, with respondents placing recession probability at 38 percent for the next six months.

Now the less good news. It’s not recession, inflation, or tariffs that most concern our firm leaders. What’s keeping them up at night is something far less tangible, and far more insidious. Even though the survey was done prior to military action in Iran, a staggering 91 percent of respondents pointed to political uncertainty as their key area of concern. It’s not a metric. It’s a mood. Regulations and federal funding priorities will always shift. But how do firms navigate an environment in which the rules keep changing and there’s no way to predict what those rules will be six months from now? Operating within a political climate that changes from news cycle to news cycle presents a unique challenge, and the overseas situation is no doubt adding to that uncertainty.

Nevertheless, the engineering industry continues to do well, for the very basic reasons that the demand is there, our backlogs are robust, and the fundamental need for infrastructure isn’t going anywhere. Unfortunately, political uncertainty isn’t going anywhere, either.

Finally, last month’s Supreme Court ruling on tariffs reframes the legal narrative surrounding the Trump administration’s economic agenda. A federal court Monday rejected the Justice Department’s attempt to place a 90-day stay on refunding tariffs. With refund pressure mounting, and the president vowing to work around the SCOTUS ruling, many of our members have been asking what’s next. For answers, our Advocacy team has partnered with ACEC affiliate member Fox Rothschild to present a virtual briefing on the ruling. The briefing is scheduled for Friday, March 6, at 1:30 PM Eastern. You can register here to attend.