The decade of the 2020s has been a volatile one for the broader economy, as anyone in the construction industry can attest.

As we hit the 2025 midpoint, builders will be pressured to effectively balance those forces. There are positives for business growth, like opportunities presented by population increases and infrastructure investments. But the drags are concerning, like the ongoing labor shortage worsened by disruptive immigration policies on the state and national levels.

The ability to adapt in order to manage the risks ahead will be the key to long-term resiliency. Here’s what the construction industry can expect in the new year.

SPENDING IS UP BUT TRENDS REMAIN

New construction spending on the national level is expected to hit $2.145 trillion in 2025 and continue up to hit $2.340 trillion by 2028. Construction of single-family homes, townhomes, and multifamily units will begin to pick up, but affordability will remain an issue as inventory will remain tight as construction expenses continue to rise.

In fact, construction firms should continue to closely monitor the direction of interest rates and inflation, given their influence on the cost of money and the investment environment. Public policy moving forward will also be a concern: Promised tariffs on strategic materials like steel and aluminum, for example, will affect costs and raise the risk of reciprocal tariffs.

LABOR WOES UNLIKELY TO IMPROVE

The shortage of skilled workers is a longstanding issue for the industry, one that national and state-level public policies stand to aggravate.

Nationally, the expected construction deficit of 450,000 workers may well worsen in the event of the new administration’s promised immigration crackdown: construction’s share of non-U.S. citizen workers is the highest of any industry at 2.45 million out of 11.38 million employees.

The drain on the industry’s vitality is pushing the quest for solutions. Apprenticeship programs continue to gain traction. There’s been a 40-percent growth in registered apprenticeship programs in the last ten years, more in construction than any other industry. The wider use of technology can make construction jobs more attractive, too, especially from the aspects of safety and skills acquisition.

Benefits have a big role to play in turning the shortage around—not wages or health insurance alone, but policies that address individual circumstances and needs. Personalized benefits can be a game-changer; by encouraging engagement and productivity, recruitment and retention improve.

EXTREMES TEST BUILDERS’ RESILIENCY

Builders know full well that weather extremes are as big a risk as economic volatility and may be less predictable.

The 2024 hurricane season, for example, was one of the most destructive on record, as 18 named storms, 11 hurricanes, and five major hurricanes battered the Atlantic coastline. Such conditions play havoc with project timelines and are a huge risk for workers; extreme heat alone is a leading cause of death for any worker laboring outside. Adjusting work schedules for weather conditions can stretch the physical work out by 35 percent. 

Combined with economic volatility, this requires contractors to focus tightly on risk management, especially since insurance costs and availability at required limits can be pressured.

A first-class broker is essential to help firms develop a comprehensive claims-management plan to get through any type of business disruption. An effective loss-mitigation strategy is another way to reduce claim severity by leveraging coverages like Extra and Expediting Expense to reduce downtime and minimize losses.

Firms also may benefit from insurance solutions relevant to their circumstances. Parametric insurance, for example, pays policyholders when weather thresholds pass a pre-specified mark. It’s an option over traditional lines that don’t cover losses stemming from, for example, heatwaves.

Above all, firms should work to effectively manage always changing business dynamics. This should include a strengthened risk-management strategy supported by an insurance program that’s right for their conditions.

about the author

Craig Tappel, CPA, CPCU, ITP, CRIS, TRIP, ARe, AMIM, is chief sales officer of global Top 5 insurance brokerage Hub International’s construction practice. In this role, he brings years of experience to his role including past work with consulting, brokerage, and underwriting organizations. Craig’s professional designations include construction risk insurance specialist, chartered property casualty underwriter, associate in reinsurance and certified public accountant. He received his BA from the Louisiana Scholars College and an MBA from Duke University Fuqua School of Business where he graduated with honors. Craig volunteers for the Tennessee Society of CPA’s, the CPCU Society, as a Board Member of the Society of Insurance Trainers & Educators and an Independent Insurance Agents of America Virtual University Expert Faculty member.