Georgia, U.S. builders bullish on data centers. But economic fears grow.

Early indications are those types of projects feeding the artificial intelligence race won’t slow down in 2026. But economic headwinds and federal policy changes have introduced uncertainty elsewhere, bringing other types of projects into question.

“While there are pockets of optimism in select private-sector markets, contractors’ overall sentiment has dampened notably compared to last year,” said Jeffrey Shoaf, CEO of AGC. “One reason for their lowered expectations is that contractors are increasingly worried about the broader economy, the possibility of a recession and the outlook for materials costs.”

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

In partnership with construction software firm Sage, AGC polled 951 respondents across the country, including 27 in Georgia. Responses were collected from Nov. 4 through Dec. 15.

The 2025 survey found only two project types — private office and retail — where confidence had waned, meaning they expected the dollar value of projects to bid on to decrease. That increased to five for 2026, adding lodging and both K-12 and higher education projects.

The 2020s have been a whirlwind for the construction industry. The COVID-19 pandemic upended the office market but created unprecedented demand for new warehouse space. The shift between the Biden and Trump administrations has also forced contractors and companies to keep their heads on a swivel, adjusting to changes in federal funding, tariffs, regulation and immigration enforcement.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

Despite hand-wringing over some of those changes, industry leaders said many construction projects persevere and are in a better place than during the height of the pandemic.

“None of it is like it was post-COVID,” said Arch C. Willingham IV, president of Tennessee-based T.U. Parks Construction, which also has projects in Georgia and Alabama.

“Owners are still cautious, but they’re still spending,” he continued. “You see it in their faces, but they still sign the contract.”

Credit: Miguel Martinez-Jimenez

Credit: Miguel Martinez-Jimenez

Overall, the possibility of an economic slowdown or recession ranked as the year’s most significant concern, according to the report. Despite the decline in sentiment, 39% of respondents said their backlog is larger than it was a year ago, while 30% say their backlog is smaller.

The Trump administration’s tariff campaign has rippled through the construction industry for months, with 40% of respondents saying it led to increased bid prices. More than a third said they passed on most or all of the increased cost of tariffs to project owners, meaning price hikes likely trickled down further to tenants. Only 24% of respondents said tariffs did not affect their business.

Construction site raids by U.S. Immigration and Customs Enforcement also became widespread in 2025, raising concerns over workforce impacts in an industry that already faces labor shortages. A third of respondents reported having been affected by ICE actions over the past six months.

Shoaf said AGC is lobbying the White House and Congress to ease crackdowns on labor sites, urging them to focus on “removing gang members and terrorists instead of those who are otherwise responsibly engaged in economic activity.” He said clarity around tariffs and new funding for transportation and infrastructure projects would help provide more stability.

“With supportive infrastructure funding, workforce, trade and permitting policies in place, construction can continue to grow the economy, deliver essential projects and expand access to high-paying career opportunities,” Shoaf said.