Market Update: How a construction business owner feels about this economy – Full Analysis

It’s time once again to take the Marketplace Economic Pulse: views of the economy from a range of perspectives. This time, we’re catching up with a building contractor in the Pacific Northwest amid tariffs, squeezes on construction talent and interest rates that never seem to come down.

Maurice Rahming is the president of O’Neill Construction Group in Portland, Oregon. He spoke with “Marketplace Morning Report” host David Brancaccio and the following is an edited transcript of their conversation.

David Brancaccio: How is the economy in your part of the country doing?

Maurice Rahming: It’s extremely volatile. I think there’s just a number of things that we have to factor in that we didn’t have to factor in in the past. So I think one of the things we talked about prior was the labor workforce shortage and the logistics on basically getting the equipment and material due to COVID. That’s all changed since last we talked.

Brancaccio: Yeah, we had talked a little bit more broad brush about older, skilled people in construction retiring out and trying to make a career in construction — which involves a lot of digital calculations, for instance, on-screen stuff — more attractive to younger people. But now there’s a different type of pressure on the labor force here in 2025. Are you seeing it play out right now?

Rahming: It’s not so much the labor force, but all the different economic factors that are playing out. We had supply chain issues in the past. Now we have how the tariffs actually affect what we do, monetary policy, as far as interest rates, and the tax policies. All of those kind of play into our decision-making that we’re going through right now.

Brancaccio: Maurice, as you look out to the fall, what do you need to know before you could hire more? I mean, what would make your ability to bring on more people an easier decision?

Rahming: I think if there is more consistency on, “this is where it’s going to be, and it’s going to be there for at least a few years,” that helps us better to plan our projects. Not having that consistency — you know, I kind of tease and say, “I could probably go to Vegas and gamble there. At least I’ll lose my money, but I’ll have fun doing it.” Here there’s so much risk that we are faced with, it’s a hard decision to actually, honestly look at someone and say, “Yes, these numbers are going to maintain for a period of time.” And they need that for to be able to go to the bank and get the loans. You know, in a sense, I feel like I’m a builder, but now I’m also an economist, where I’m trying to figure out all these different other factors that impact the way we do work. There’s so many different things that we’re concentrating on outside of just building the buildings.

Brancaccio: When you’re estimating jobs right now, how are you thinking about tariffs?

Rahming: Well, so one of the things that we’re thinking about, right, our three biggest trade partners are Mexico, China and Canada. And so as we look at products that we’re trying to select for our customers, we have to think about how that’s going to impact their budgets, their bottom lines. So it’s hugely challenging.

Brancaccio: Yeah, like, if you’re buying a bunch of lighting fixtures for a commercial property, right? You’ve got to know what the added import tax is going to be.

Rahming: One of the things that we’re finding is that we’re having to kind of give our customers responses that makes it harder for them to budget. Where we feel like, “OK, there’s not an effect yet. But, you know, it seems like it’s hard to predict.” What happens today, is that going to be consistent over the next three weeks, three months, three years?

Brancaccio: Oh, so you give people like a range. You’re saying, “Look, if it was today, it would be this, but we have to put a fudge factor in.”

Rahming: You got it, exactly. So we don’t like to surprise any project with costs that they could not anticipate. So we do try to let them know that, “Hey, look some of these areas are unknown.”

Brancaccio: For stuff like, what? I mean, I suppose, drywall from Mexico?

Rahming: Yeah. Copper, steel commodities, yeah. I kind of feel like a little bit of a mini commodities broker as I look at to see where copper prices — I know over the last while now we’ve been kind of monitoring that because there’s so much copper wire.

Brancaccio: Let’s talk about interest rates. People borrow to build things, both commercial and residential. The average 30-year fixed-rate home loan has been in the range of 6.5% to just over 7% since last fall. That seems moderately high to many people. That must play out as people do the math on whether or not they can build with you.

Rahming: Yeah. And so on the residential side, it’s extremely sluggish. What we’ve seen in the past is when the residential and the commercial markets on the private side are sluggish, it’s kind of a seesaw effect, where there would be more public works projects occurring. Because of the uncertainty with the public sector, what we’re seeing is just a huge amount of volatility in our industry.

Brancaccio: So, Maurice, you’re saying there’s so many question marks out there that it makes it harder for people building a new house for themselves or a commercial project — for them, to give you the green light? They’re just not quite sure if they can afford?

Rahming: Exactly. And one of the things is that we usually use data to base all our decisions, right? Because there are so many different variations, there’s a lot more risk built into what we do. There are so many different unknowns.