The first major risk is a policy mistake. Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) readings show inflation still well above target and the FOMC’s median 2026 funds rate hovers at 3.8%.¹ The Fed has a high hurdle to cut because inflation is above target and labor conditions are not clearly deteriorating enough to force easing.² Easing too early could reinforce upward inflation pressure; holding too tight for too long could intensify credit stress, weaken hiring, and punish rate-sensitive sectors such as housing, traditional commercial real estate, and private construction.³

The second risk is global shock transmission. Moody’s global outlook sees global growth steady but subdued, around 2.5% in 2026 and 2027, with advanced economies growing about 1.5% and emerging markets around 4.0%.⁴ The IMF’s July 2026 update projects global growth of 3.0% in 2026 and 3.4% in 2027, with global disinflation stalled and risks from renewed conflict and financial-market repricing still present.⁵ The consensus outlook can be framed around two scenarios: time-limited vs. prolonged Middle East disruption, with the prolonged scenario producing significantly weaker growth and higher inflation.⁴

The third risk is that the AI cycle becomes a shock rather than a shock absorber. An AI-driven equity selloff is one of the risks that could trigger a financial event, shifting AI from a shock absorber to a shock magnifier.⁶ Because high-income spending and market wealth effects are important to current consumption strength, an equity correction would hit the very income group currently carrying a disproportionate share of spending.⁷

The upside case is still credible. Faster productivity gains, broader AI adoption, easing inflation, more stable energy prices, trade de-escalation, and eventual rate relief could broaden growth beyond AI infrastructure and high-income households.⁴ For construction, gains would be strongest if lower rates and clearer policy revived private development while already-strong data center, power, water, and healthcare pipelines stayed intact.⁵