🌟 ACEC's Latest Insights: Economic Confidence Rebounds

To the ACEC Community,

When the ACEC Research Institute’s Q2 Engineering Business Sentiment Report surfaced pockets of deep concern for the U.S. economy—and deepening concern for the state of our industry—we determined it would be prudent to keep close tabs on both these metrics, even beyond our quarterly surveys. To that end, during the first week of June, the Institute conducted a mid-quarter Lightning Poll of 548 firm leaders from across the country to get their in-the-moment thoughts about our business climate.  

The results were surprising. 

First, let’s revisit the findings of the Q2 Report and the timeline during which the data were collected. The surveys were conducted between April 1—April 14, the post-“Liberation Day” period during which the markets fell after tariffs were imposed on April 2. Over that two-week period, the Dow fell nearly four percent, while the S&P 500 saw its fifth-largest two-day percentage decline on record.  

That was the economic climate respondents were asked to assess for our Q2 Sentiment Report. Against that unique backdrop, future sentiment for the U.S. economy dropped an unprecedented 62 points, while industry sentiment and the outlook for firm finances both decreased precipitously (-45 and -36 points, respectively). When the stock market ticker is a sea of red and you ask business leaders how things are going, these are the results you get. 

Fast forward two months and the responses are quite different. This time, when asked about the overall U.S. economy, confidence surged to +36, more than tripling its +11 rating from Q2. At the same time, confidence in our industry remains strong and inflation anxiety is easing, but nearly half of all respondents still believe a recession is likely within the next six months.  

Not a completely rosy scenario for our industry or our overall economy, but certainly an improvement over the ominous numbers we saw in Q2. As an industry, we have enjoyed year after year of stratospheric growth, but if the last few months have shown us anything, it’s that we are not immune to external market forces. Whether it’s tariffs or taxes, inflation or immigration, everything that happens here in Washington has bottom-line implications for our firms.  

That was the impetus behind forming our Market Intelligence Committee—to see around corners and recognize trends that might affect our firms’ bottom lines. Last week, the MIC held a briefing on the housing market featuring an economist from the National Association of Home Builders and the VP of Land Development from Taylor Morrison. The session was fascinating in its juxtaposition between the hard data offered by the economist and the on-the-ground observations of the builder.

The economist walked through the economic indicators, noting a few red flags for both the housing market and the overall economy—namely tariffs, inflation, and interest rates. Conversely, the builder revealed his firm hasn’t yet seen any real impact from the tariffs, reporting that his costs have remained steady, homes are still selling, and median home prices are holding. Together, their presentations depict a housing market that is also not immune to external forces, but that continues to do well. Not great…but well.  

Another public policy that will impact the economy is the tax bill moving through Congress. The Senate bill – released on Monday – improves on the House bill by making Section 199A permanent and providing a permanent fix for R&D with some additional relief for smaller firms. We’re continuing to advocate on the proposed repeal of the renewable energy tax credits. Unfortunately, the Senate bill also drops the EV user fees for the Highway Trust Fund that were approved by the House. Even if there is a positive outcome on tax, we’re already focused on the challenges of funding a surface transportation reauthorization bill in 2026. 

I say all of this as a reminder that both advocacy and business are a dance of highs and lows. The ups energize us. The downs humble us. But each offers its own lessons and opportunities. All in all, we are a strong and resilient industry, built to withstand whatever bumps may come our way.  

Linda Bauer Darr

President & CEO

American Council of Engineering Companies | ACEC

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