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The AIA’s forecast suggests a rise in the commercial market and institutional building sector, largely driven by growth in data center activity and healthcare projects. The manufacturing sector, however, is expected to decline due to a decrease in public funding and uncertainties over tariffs. Three main factors impacting the U.S. economy include cyclical pressure from high interest rates and inflation, structural shifts such as an aging population and slower labor force growth, and policy changes like higher tariffs and increased immigration enforcement.
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Key Factors Influencing Sectors in US Economy
The commercial and institutional building sectors are set to see growth in the next few years, according to a forecast from the American Institute of Architects (AIA). The commercial sector is expected to grow by 4.8% in 2026 and 5.8% in 2027, largely due to a surge in data center activity. Similarly, the institutional building sector is anticipated to experience a 2.8% growth in 2026 and 2.7% in 2027, boosted particularly by healthcare projects.
Concerns for the Manufacturing Sector
However, not all sectors are projected to fare so well. The manufacturing sector is predicted to see an 11.6% decrease in 2026 and a minor 0.6% dip in 2027. “While the level of activity is expected to remain robust by historical standards, the declines represent a downshift following the massive infusion of public dollars from the CHIPS and Science Act and the Inflation Reduction Act,” the report detailed. This pullback is accentuated by the uncertainty surrounding tariffs, which could potentially influence the decision to proceed with long-term capital projects.
Three Key Influencers on the US Economy
The AIA identifies three principal factors affecting the US economy: cyclical pressure, structural shifts, and policy. Cyclical pressure refers to the effects of high interest rates and ongoing inflation, which have resulted in a decline in consumer demand, tightened financing conditions, and a relaxation of the labor market. As a result, developers are reconsidering, postponing, or even canceling projects.
Structural shifts are also altering the landscape across multiple building sectors. The rapid aging of the population is creating a demand for healthcare and other institutional services. Additionally, decreased immigration and slower growth in the labor force are exacerbating workforce limitations, impacting the cost and availability of labor and the long-term prospects for housing and school buildings.
The third factor, policy, includes higher tariffs, increased immigration enforcement, and escalating geopolitical risk, all of which contribute to the uncertainty in project planning.
You can find more details about AIA’s July 2026 Consensus Construction Forecast in their full report.
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