A new report reveals potential storm clouds gathering over the construction industry. The Associated Builders and Contractors' Backlog Indicator, a key gauge of future work, has dipped yet again, raising concerns about a slowdown.

While some might point to steady contractor confidence as a silver lining, a closer look reveals a troubling disconnect.  Despite a shrinking backlog, a majority of contractors still expect sales and staffing to grow in the coming months.   Are they clinging to wishful thinking, or is there something more at play?

Economist Anirban Basu acknowledges the stable backlog, but warns that rising input costs are squeezing profit margins.  This could be a recipe for disaster, with contractors stuck between a rock (shrinking work) and a hard place (rising expenses).

Here's the real shocker: This decline comes despite significant spending in manufacturing and infrastructure.  So, what gives?  Is the construction industry suffering from a collective case of amnesia, or is there a deeper problem lurking beneath the surface?

The Federal Reserve's interest rate hikes cast a long shadow.  Could these be the leading edge of a recession, one that the construction industry seems to be sleepwalking into?  Only time will tell, but this report suggests contractors may need to wake up and smell the (lumber) burning.

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