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2022 Construction Forecast: Another Year of Recovery—and Challenges

As we embark on 2022, the world continues to weather the ongoing effects of the COVID-19 pandemic. For the construction industry, the pandemic has spurred certain unique and daunting challenges that are, by now, unfortunately, familiar to industry players. These challenges include skyrocketing material prices, supply chain disruptions and labor shortages. While these challenges will not dissipate entirely in 2022, industry leaders and economists are optimistic that some may ease. In addition, an influx of government spending will create new work opportunities, but the million-dollar question is: will companies have enough workers to perform them?

Ken Simonson, the chief economist for the Associated General Contractors of America, describes himself as “nervously optimistic” about 2022. He and other construction economists and experts identified the following trends to watch this year in the industry.

Public Work

Local, state, and federal spending is expected to drive construction activity in 2022.

The $1.9 trillion American Rescue Plan Act, passed in March 2021, contains $10 billion for critical capital projects to provide communities with access to high-quality modern infrastructure, including broadband, as part of the recovery efforts in the wake of the pandemic. Many of these projects should kick off in 2022.

The more recent Infrastructure Investment and Jobs Act, passed on November 6, 2021, directs $550 billion in new federal funding to transportation, water, and power infrastructure. Although projects funded by this Act are unlikely to ramp up until the second half of 2022, according to Contractor Magazine’s forecasts, contractors of all sizes can expect to be able to bid that work this year.

The chief economist for Associated Builders and Contractors and CEO of Sage Policy Group, Anirban Basu, surmises that local governments also will benefit from increased revenue from property taxes. Home re-assessments and the enormous growth in home values in 2020 and 2021 “will mean more tax base for many communities.”

Finally, renewed public investment in shared resources and spaces in 2022 is expected to infuse millions of dollars into the construction industry.

Labor Shortages

Labor shortages undoubtedly will continue to impact the construction industry.

According to the United States Bureau of Labor Statistics, in July 2021, 4.5% of construction jobs were unfilled, totaling about 347,000 jobs. By November 2021, those figures had decreased marginally to 4.4% and about 345,000 unfilled jobs. Contractor Magazine reports that some of this shortage is attributable to a natural progression of the workforce accelerated by the pandemic—“more than five million people over the age of 55 exited the labor force, with about 1.5 million of those choosing to take early retirement.” But an aging workforce cannot fully explain the millions of Americans who left the workforce in 2020 and 2021.

Nevertheless, Contractor Magazine also reports that construction hiring has remained “solid” despite the shortages. LaborIQ predicts a 3.9% growth in construction jobs in 2022 and also predicts a commensurate 3.9% median wage growth in construction jobs and, in some metropolitan regions, even wage growth of over 4.5%.

Increased wages may bring people back to work to some extent and lessen the impact of labor shortages in certain geographical areas.

Construction Materials

Material prices are still severely elevated and may fluctuate in 2022.

The Bureau of Labor Statistics estimates that construction material prices were up overall by almost 25% in 2021. Although prices are not expected to stabilize in 2022, construction experts do not expect the upward trend to continue unabated, thankfully. Dodge Construction Network’s chief economist, Richard Branch, expects increases to continue until mid-2022 before decreasing in the second half of the year.

Simonson is also optimistic about prices coming down, at least for some periods of time, pointing to decreases in copper and hot-rolled coiled steel at the end of 2021 as indicators of similar reductions likely to come. He anticipates “more up and down volatility” in 2022, which Construction Dive notes is at least better than the exclusively upward trajectory experienced in 2021.


While issues of labor shortage and material escalation are likely to remain, there are signs that another recent development—inflation—may actually provide some relief.

It has been much reported that, as of October 2021, U.S. inflation reached a three-decade high of 6.2%. The bright side of inflation, according to Basu, is that higher prices of consumer goods may force people back into the labor market. Construction Dive also posits that rising prices have “put pressure on developers to lock in contracts now, before costs can go higher,” resulting in more projects.

Inflation does not help with materials prices, however. Basu predicts that the Federal Reserve may step in to limit the inflation rate to 3-4%, which could help reduce the pricing of certain materials.


We are not out of the woods yet. In 2022, contractors will face many of the same obstacles as they did in 2021. But, with the Omicron variant already on the decline in many parts of the United States, construction outfits can get back to planning for a busy year ahead, including the challenges it may bring. Cohen Seglias’ construction lawyers help clients navigate these challenges and offer legal tools to manage risk and improve a company’s economic outlook for the coming years.

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