Interest rates and policy risks cloud Wisconsin construction in 2026

By JIMMY NESBITT

Special to The Daily Reporter

Wisconsin’s construction industry outperformed the national average in 2025, though uncertainty around interest rates has left the outlook for this year mixed.

That was one of the main takeaways from a recent analysis by Anirban Basu, chief economist for Associated Builders and Contractors.

The Badger State is facing many of the same macroeconomic headwinds as many other states to start the year, including high interest rates, inflation and trade policy and geopolitical uncertainty, Basu said in a blog post titled “Uncertainty dominates construction outlook.”

Still, he added, there is reason to be optimistic as borrowing costs are expected to decline by the second half of 2026, especially if broader inflation remains tame. “That will likely be accompanied by looser lending standards and a rebound in certain struggling subsegments,” Basu said.

Wisconsin’s construction industry grew at a healthy pace in 2025, adding 5,100 new jobs. That equates to a 3.1% year-over-year increase, outpacing nationwide construction job growth.

But if statewide economic growth slows or fails to accelerate in 2026, that could negatively impact construction activity, Basu said. “Trade and immigration policy also represent significant risk factors, and tariffs have put renewed upward pressure on materials prices,” he added. “This is especially true for inputs most exposed to tariffs, with prices for certain metal inputs up more than 30% over the past year.”

Despite those challenges, several major construction projects are moving forward across Wisconsin, including Enbridge’s 41-mile reroute of the Line 5 oil pipeline, the Microsoft data center campus in Mount Pleasant and the Interstate 94 East–West reconstruction project in Milwaukee.

“Wisconsin enters 2026 with a foundation of strength: low unemployment, stable wage growth, a diversified economy, and a construction sector anchored by infrastructure, utilities, and growing demand for data centers,” Robb Kahl, executive director of Construction Business Group, said in a press release.