KEY POINTS
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Consumer spending drives 70% of America’s economy, but private investment, especially in construction and manufacturing, triggers the largest swings in annual GDP.
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The rise of massive $1 billion-and-up megaprojects has reshaped investment spending, with just a few projects now dictating industry totals and volatility.
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Megaprojects carry high risk due to their size and timeline; sudden market changes can halt or derail them, making sustainable growth less certain in future forecasts.
Most of America’s broad-based economic growth is thanks to consumer spending, which makes up 70% of all economic activity. However, the 20% that is derived from private investment spending typically causes large GDP changes.
The Changing Nature of Investment Spending
Since 2000, annual swings in private domestic investment have varied from a 26% contraction to a 24% boom. Such adjustments have significant ramifications not only for the overall economy but also for manufacturing and construction spending in particular.
Additionally, the nature of investment spending has evolved in recent years with the rising frequency of megaprojects—defined as projects of $1 billion or more in total construction. Never have so few, but very large projects had such big consequences for the future trajectory of an entire industry.
Megaproject spending year-to-date in 2025 is up by $43 billion, or 47 percent, over comparable 2024 levels. Image: ConstructConnect
In the calendar year ending October, manufacturing captured $61 billion, or 37% of all megaproject spending, easily exceeding data centers in second place at 23%. This has propelled year-to-date manufacturing to a record $97.5 billion.
During the same period in 2024, comparable figures were just $18.5 billion from megaprojects and $52.2 billion in total, illustrating just how quickly construction spending trends can change.
Starts Spending and Megaprojects
The fact that over 60% of recent manufacturing starts spending has been generated by just twelve megaprojects should give construction analysts pause. Through October, nonresidential building activity increased 13.5%, or $46.7 billion, compared to the same period in 2024.
However, this broad rise only slightly exceeds the $45.3 billion in manufacturing gains alone and ignores this year’s surging data center activity.
Megaproject Risk and Vulnerability
Megaprojects are uniquely vulnerable to change as they represent extremely large investment bets from a small pool of extremely large firms. Like all projects, they are subject to financial and market forces that can cause them to miss their financial targets.
That megaprojects often require considerable construction time only adds to their risk. Miscalculations in distant market conditions could significantly impact expected profitability.
One need only examine the growing list of megaprojects recently halted mid-construction due to changing market conditions to understand the risks associated with long-term investments.
Tempering Expectations
In light of the above, our latest starts forecast has adopted a more tempered outlook for both manufacturing and data centers.
The extreme spending growth observed in recent years may continue; however, it is by no means certain. Over the long run, construction activity is far more certain to return to broad-based, but more modest, growth rates. History has always shown that all investment booms eventually must end.
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