The U.S. economy continues to show a K-shaped pattern, with growth and spending improving even as other indicators soften. Gross domestic product (GDP) and consumer spending remain steady, but the labor market has lost momentum, consumer sentiment is downbeat, and inflation remains elevated. Artificial intelligence (AI) has likely played an outsized role in sustaining growth, with gains in equity markets creating a wealth effect concentrated among higher-income households. The top ten percent of consumers now account for roughly half of all spending, supporting near-term growth but contributing to a more fragile economic balance overall.

In the construction sector, costs are rising at a historical average rate of 0.73% nationally, down slightly from 0.8% in the second quarter. While price pressures are expected to persist, softer demand and margin compression have helped limit escalation at the project level. Fewer trades are reporting material price increases, and backlogs are beginning to stabilize.

Looking ahead, a gradual easing of rate policy and reduced uncertainty are expected to strengthen business and consumer confidence. Combined with steady demand, these factors point to a more optimistic outlook for 2026 compared to 2025.