2024-27 SLED AEC Market Forecast

The state, local, and education (SLED) architecture, engineering, and construction (AEC) market has lifted off its original modest glide path prior to 2022 and reset to a significantly higher level due to multiple rounds of federal stimulus, but mostly due to the effects of the Infrastructure Investment and Jobs Act (IIJA) that was passed at the end of 2021 but has undergone a ramp-up phase and by 2023 was considered to be hitting full speed. IIJA was supplemented with additional waning funding from the end of the American Rescue Plan Act (ARPA) and also boosted in some areas such as clean water by early allocations of the Inflation Reduction Act stimulus program. 

We are expecting this higher trend line of elevated demand to continue through the forecast period to 2027 with only slight softening even though the core five-year funding period of IIJA allocations will end in late 2026. The case for a strong 2027 is still considered reasonable considering that major components of projects can still continue to be finished in 2027 tied back to 2026 allocations and our report is based on Census data for the “value of construction put in place” not what is actually allocated and sent to the individual governments. Further, IIJA has seen delays in getting started and some funds should remain by 2027 that Congress can decide to use. The Inflation Reduction Act will continue past this point and other sources of funding will also be available. Public support for infrastructure remains strong and due to high inflation recently, the needs will continue to dwarf the available financial support. However, we do expect a potential for a noticeably weaker 2028. The 2024 elections may play a role in how these spending and contracting trends evolve--although the IIJA is considered safe from cuts.

While there remain concerns about the economy, this sizable “reset” of extra funds will help provide stability for governments as well as for the contractors, professional services firms and material suppliers who depend on this important source of leads and new business.   

This report will help contractors understand market trends across 11 major Census categories, many sub-categories, 12 different Deltek market verticals, 8 different Deltek levels of government, all 50 states and DC, and four different types of projects (build, design/build, design-only and renovation). Census categories include amusement and recreation, commercial, educational, healthcare, highway and street, office, power, public safety, residential, transportation (air/sea/land) and water/sewage/waste disposal. In addition, we profile the non-Census category of “trail and path.”

Our annual analysis of the governors' agendas in 2024 will also be reviewed to examine certain categories and themes that are relevant for the AEC market.