With the midterm elections over, a more assertive push to regulate data centers could cloud the outlook for projects not already underway, even as construction spending is expected to rise modestly in 2027.
Healthcare spending and clean energy incentives could become legislative priorities, while a federal shutdown could disrupt projects that rely on government funding.
A new infrastructure bill may have a slightly better chance of passage, but construction’s broader recovery still depends on reducing policy and investment uncertainty.
The midterms are over, but the results leave the immediate constraints facing builders in place, including high interest rates, material costs and uncertainty over federal policy. It does, however, set the stage for a new Congress to revisit funding priorities and rules affecting several major project markets in the near future.
The outlook for data centers, healthcare, clean energy and transportation could shift as a result. The period before the new Congress is seated could bring budget disputes, with consequences for federally funded work.
I asked my colleague, ConstructConnect Chief Economist Michael Guckes, and two other chief economists, Ken Simonson of The Associated General Contractors of America, and Richard Branch of The American Institute of Architects, to weigh in on the anticipated impact of the midterm elections on US nonresidential construction.
Here's what they had to say.
Data Centers Face More Political Headwinds
Michael Guckes, chief economist at ConstructConnect, said a stronger Democratic presence in Congress would raise the odds of tighter scrutiny of data center development. Both parties have shown more skepticism toward the sector, he said, but Democrats are more likely to pursue moratoriums or stricter regulations.
That would not amount to an expected halt in data center construction, Guckes said. Instead, it could add headwinds to the market, which has been a major source of growth for the construction economy. The concern is most significant for the longer-term pipeline, as projects already underway or ready to break ground will likely continue moving forward.
Healthcare could also become a focus. Guckes expects Democrats to pursue measures to lower healthcare costs, potentially restoring parts of recently expired Affordable Care Act provisions and reversing some of the roughly $1 trillion in cuts to the system. He said a Medicare for All plan is unlikely without unified Democratic control of Congress.
A September memo from a House Democratic working group described reversing Medicaid cuts as a starting point, while calling for broader action on healthcare affordability and coverage, according to Politico. For construction, any change in federal healthcare policy could affect the funding environment for healthcare developments and related projects, although the scale and timing would depend on specific legislation.
Guckes also pointed to the potential for Congress to restore some clean energy subsidies scaled back or restructured under the OBBBA. Renewed incentives could support demand for electric vehicles, residential solar and commercial wind and solar projects. He said lawmakers could also revisit provisions that slowed coal plant retirements, potentially renewing pressure to develop cleaner energy sources.
The election also raises the odds of a government shutdown. The current continuing resolution expires Dec. 11, about three weeks before the newly elected members are sworn in. That leaves a lame-duck Congress a short window to pass full-year funding or another stopgap, and the election results could harden positions on spending priorities, including healthcare.
An extended shutdown could disrupt projects and sectors that depend on federal funding, as happened during the October 2025 shutdown. That risk will return whenever the continuing resolution runs out, as a Democratic-held Senate would sit considerably further from the administration on spending priorities, potentially making each deal harder to reach.
Data Center Pipeline and Highway Bill Remain in Play
Ken Simonson, chief economist at Associated General Contractors of America, said voters in several states approved measures to slow or stop data center approvals and elected officials who have opposed such projects. In his view, that adds uncertainty to the sector’s outlook after 2027.
“I believe there are enough projects underway or ready to break ground the construction spending on data centers will increase modestly in 2027 but the outlook beyond that has grown more uncertain,” Simonson said.
He also sees a marginal improvement in the prospects for a federal highway and transit funding bill in 2027. "Democrats may want to demonstrate they can pass legislation, while President Donald Trump could support a bill that allows him to claim credit for construction investment," Simonson said.
Simonson added that, "A new bill would provide a funding path for transportation work, but passage remains uncertain."
Policy Certainty Still Matters
Richard Branch, chief economist at the American Institute of Architects, cautioned against reading the election as an immediate turnaround for construction.
"Over the last two years, construction activity has been restrained by high interest rates, rising material costs, and uncertainty about the direction of federal policy," Branch said.
"The election results alone won’t remove those obstacles. A stronger recovery will depend in part on Congress and the President working together to reduce uncertainty and address the barriers holding back investment,” Branch added.
For contractors and suppliers, the near-term picture is therefore mixed. Projects already moving through the pipeline may sustain spending in sectors such as data centers, while funding disputes or new regulations could alter what follows.
The clearest signals will come from Congress’ decisions on appropriations, infrastructure funding, healthcare and energy policy, and whether those decisions reduce or add to uncertainty for investment.
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