Will federal interest rates drop in 2025?

High federal interest rates continue to plague growth in the construction industry, but could cuts be in sight? Today we share expert insight on what moves the Federal Reserve may make in 2025 to ease construction costs. But first: Check out which iconic Walt Disney World ride is closed for construction until 2026.
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Here's a peek at what's in today's issue:
// How interest rates will impact the industry this year
// What workforce issues leaders need to focus on
// Which Southern city is having a building boom
// Where we are on Corporate Transparency Act filings

>> Who we're following: Jennifer Todd on LinkedIn. Founder of LMS General Contractors — with offices in San Francisco and Pompano Beach, Fla. — shares her reflections as a Black woman in construction and engineering alongside her thoughts on business leadership.
>> What we're listening to: Design-Build Delivers January 2025 episode. Sector leaders join DBIA's Lisa Washington and Tom Foley to reflect on big wins from 2024 and look ahead at trends for 2025.
>> What we're reading: This moving story in The Post & Courier that details how Texas-based Environmental Design Inc., relocated a massive live oak to make way for a new Greystar project in Charleston, S.C.
>> What's happening soon: The webinar "Making digital twins useful via mobile robotics, AI, and augmented reality" on Jan. 23. The event, hosted by The National Institute of Building Sciences, will cover ways to leverage these technologies and processes.
>> Just for fun: Appetite for construction. Sandwiches of History offers a peek at how iconic sandwiches are constructed!

Fed fears: Construction leaders worry about interest rates
John Kirk, founder of Lightpath Co., an apartment builder in New Braunfels, Tex., told Marketplace that despite recent cuts, interest rates will continue to make it difficult for deals to pencil. “You’re not going to see a huge, robust pipeline of supply hitting the market again,” he predicted.
In mid-December, the Federal Reserve Bank clipped interest rates by a quarter-point, trimming the target rate to between 4.25% and 4.5%, but that may not be enough to stimulate market activity.
The central bank expects two additional cuts to further reduce the rate in 2025. The Fed meets eight times a year; its next meeting is later this month.
Why it matters: Until rates come down to a more reasonable level, Kirk said builders like him will be cautious “when it comes to site selection, and what deals do they believe in, and how do you raise capital and really get it across the finish line to start construction.” (Marketplace)

>> Spending Spurt: Construction spend up in November
>> Optimistic Opinion: Recovery across sectors in 2025
>> Building Boom: Major projects crop up in Mobile, Ala.
>> Building Benchmarks: Seattle unveils energy expectations

Survey says: Inspiration is top workforce challenge
New analysis from Gallup reveals the most prominent workforce challenge leaders anticipate in 2025 is inspiring employees through transition and uncertainty. The specific aspects requiring leadership focus are:
Employee satisfaction, which is at a record low. The number of employees hoping to change jobs hasn't been this high since 2015; and the percentage of workers who feel their employers take interest in their well-being has dropped below pre-pandemic levels.
- Your to-do: Re-engage your workforce by communicating a clear connection to your mission and commitment to employee engagement, satisfaction and well-being.
Access to affordable childcare, which continues to keep more women (35%) than men (18%) from pursuing or accepting promotions.
- Your to-dos: Revise job descriptions and expectations, create childcare benefits and find additional ways to support employees with kids.
Expectations and feedback, which aren't communicated enough. Managers think they're giving feedback and recognition more than their direct reports do, 50% to 20%, respectively.
- Your to-do: Formalize regularly scheduled feedback and recognition sessions with individual employees and teams.
Why it matters: "By changing how people are managed, employers can address engagement and well-being simultaneously, creating a new foundation — especially in uncertain times — for consistent performance, retention and organizational growth," noted Gallup's Ben Wigert, director of research and strategy, Workplace Management; and Ryan Pendell, senior workplace science editor. (Gallup)

Reporting requirements: Update on CTA filings
It was a busy December for the Corporate Transparency Act and its "beneficial ownership information" reporting requirement.
A preliminary injunction issued mid-month initially delayed compliance filings. A week later, another judicial body issued a stay, effectively striking the previous order down. Then, on December 30, a third judicial entity vacated that decision, prompting the Financial Crime Reporting Network (FinCEN) to issue the following statement in an attempt to make reporting requirements clear:
"As of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is once again in effect... reporting companies are not currently required to file beneficial ownership information with FinCEN."
"The delay represents a bit of legal whiplash for small business owners," wrote CNBC reporter Greg Iacurci.
Reporting companies may continue to voluntarily submit beneficial ownership information reports, a practice the NAHB recommends for entities incorporated between Jan. 1, 2024, and Dec. 31, 2024, with CTA reporting obligations.
Why it matters: “The bottom line is that no one needs to file a BOI Report — unless and until the injunction is lifted,” wrote Daniel Stipano, a law firm partner at Davis Polk & Wardwell. Stay vigilant! (CNBC)
Disclaimer: This information is not intended as a substitute for professional legal consultation; it is provided “as is” without any representations or warranties, express or implied. Always consult professionals when you have specific questions about any financial matter.

- Journal your way to being a more effective leader — Use that empty notebook or blank screen to elevate your performance with these tips from Purdue professor Scott Hutcheson.
- Manage office politics without sacrificing your values — Learn the three skills necessary to navigate office politics with integrity in this HBR on Leadership session recording.
- Embrace technology to drive business in 2025 — Review three tech-related New Year resolutions from The Construction Financial Management Association and Sage Construction and Real Estate's Dustin Stephens.
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The Level is written by Margot Lester and edited by Katie Parsons.