US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Are Reusable Bags & Other Similar Items Making a Comeback?

Vermont’s Agency of Natural Resources and Department of Environmental Conservation announced that its ban on single-use plastic shopping bags will go into effect on July 1. This decision is in contrast to other states – such as Maine, Massachusetts, and New Hampshire – that chose to postpone or pause implementation of their bag bans or their fees on the use of such bags in light of heightened hygiene concerns surrounding the coronavirus pandemic.

To counter concerns that reusable bags can spread contagion, Vermont’s agency is recommending that customers bag their own groceries and wash their reusable bags regularly.

Statements about the safety of reusable products, including shopping bags, and increasingly being offered. Scientists are emphasizing that the transmission risk is from breathing in droplets containing the virus, not from contact with surfaces, reusable shopping bags or otherwise.

The long-term challenge is to rebuild the habit of using reusable products and create new habits around proper cleaning and maintenance of these items.

For more information and discussion of opportunities, see The Freedonia Group’s catalog of packaging research, including Retail Bags and Global Single-Use Plastic Packaging Regulations. Freedonia Custom Research is also available for questions requiring tailored market intelligence. 

  Consumer Goods      Covid-19      Packaging    

China Halts Poultry Imports from Tyson Foods’ Arkansas Plant

June 23, 2020 - China has suspended poultry imports from a Tyson Foods plant in Arkansas, citing health concerns following an outbreak of COVID-19 among workers at the facility. As there is no evidence of foodborne transmission of the virus, however, the suspension could be a political maneuver, at least on one level, rather than purely a public health measure, particularly as the US-China trade war remains unresolved

China is an important export market for US meat, poultry, and seafood. Hence, these products are a key focus of ongoing trade negotiations between the two countries: 

  • In November 2019, China lifted a five-year ban on US poultry imports due to a meat shortage in the country, though a 25% tariff on these imports remained in effect. 
  • In January 2020, Phase 1 of a trade agreement between the US and China entailed removal of tariffs from imports of US pork and other products to China. 
  • In March 2020, China exempted US imports of poultry from tariffs, boosting US poultry shipments to China. 

Still, some consumers have shifted away from consumption of meat and poultry products, as high concern about reigniting viral spread is bringing about levels of caution that exceed those recommended by science at this point. The relation between food and health is of particular concern in China, where food safety efforts are increasing out of concern that the virus was initiated and spread at food markets.

Regardless of the motive, this Tyson plant is down one more important customer: China. Depending on the ability of US producers to ensure worker safety, other plants could be targeted in this way as well. 

This latest move comes at a time of increasing disruption of meat, poultry, and seafood supply and demand due to the COVID-19 pandemic. Restaurant closures and other restrictions in the foodservice sector have led to steep declines in demand for meat, poultry, and seafood at wholesale levels, while consumers seek more meat packaged for and available at retail grocery channels. News of outbreaks throughout the US meatpacking sector could further hinder supply and raise prices as plants temporarily shut down.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including a report on Meat, Poultry & Seafood Packaging. Additional information is also available in food reports available from The Freedonia Group’s sister publisher Packaged Facts, including Food Market Outlook 2020: Home Cooking & Grocery Shopping in the Age of Coronavirus. Freedonia Custom Research is also available for questions requiring tailored market intelligence. 

  Covid-19      Food & Beverage    

Increasing E-Commerce Demand Provides Opportunity for Construction Industry

A recent article highlighted yet another indicator that the US economy is slowly returning to normal: increasing demand for warehouse space. This has been driven by:

  • the shopping habits of US consumers, as more people rely on online shopping for groceries and other basics
  • consumers’ shifting purchasing needs – goods that were not sold as consumers increasingly opted to spend limited budgets on staples rather than nonessentials had to be stored somewhere
  • companies needing more space to sort bulk shipments into smaller, more consumer-friendly packages

This need for more warehouses, local fulfillment centers, and other sites for storing and moving goods represents a tremendous opportunity for the construction industry, as these structures tend to require significant quantities of:

  • basic building materials, such as concrete for flooring, roof decks, and internal supports
  • prefabricated metal components, such as roof trusses and exterior and interior wall panels
  • low-slope roofing materials, such as bituminous, plastic single-ply, or runner membranes, as well as standing seam metal roofing
  • large and complex HVAC systems, as well as specialty cooling systems for food storage structures
  • overhead doors
  • pallet racks and management systems

In addition to the materials themselves, hundreds of skilled tradespeople will be required to erect these buildings, install their components, and keep them operating over time – further boosts to the US economy as it recovers from the coronavirus pandemic.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products area and Global E-Commerce. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


An Effect of the COVID-19 Pandemic: Renewed Interest in Domestic Manufacturing

As the US continues to deal with the effects of the COVID-19 pandemic, one effect is renewed interest in examining supply chains, in some cases expanding the US manufacturing base and in other cases diversifying the supply chain rather than counting on a single or limited number of source locations. The White House has even gone on record stating that any future stimulus must invest in creating manufacturing jobs in the US.

While there has been an emphasis on such industries as personal protective gear, the fact of the matter is that a wide range of manufacturing industries are interested in reshoring production in the US. For instance, a number of companies in the building and construction industry are equally interested in seeing more US firms doing manufacturing locally rather than globally. The advantages of this shift would include:

  • minimized risk of supply dislocations – more firms operating closer to US customers would boost market responsiveness
  • local economic growth – US manufacturing firms tend to offer high wages, which would enhance the purchasing power of US consumers
  • continued development of natural resources – US energy costs, supported by rising use of low-cost natural gas and solar power, can allow domestic manufacturers to spend more on production or technical development

At the same time, rising wages in many parts of Asia, coupled with increasing automation in US factories, is making reshoring a more cost efficient proposal for certain industries.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19    

May Retail Sales Report: Fast Growth From a Low Base

The May monthly retail sales report was released this week. One thing worth noting – for the uninitiated – is that this information is linked to sales by type of retail outlet, but that doesn’t fully align with sales of product categories in some cases. For instance, sales of sporting and recreation goods might be lower than one would expect because the data only count sales at stores that primarily sell these products and do not include items in this category that are sold at mass merchants like Walmart and Target, whose sales are classified elsewhere.

The May report show that the big winners remain:

  • grocery/food retail stores
  • building materials/garden equipment dealers
  • retailers that operate outside of brick-and-mortar locations (including e-commerce not linked to conventional stores)

These are retailers that, for the most part, remained open during stay-at-home orders because they were considered “essential” businesses. Additionally, their product mix includes categories that continue to benefit from the shift toward staying home – e.g., home cooking over eating out and DIY home and garden improvements.   

Several other categories – including furniture, gas stations, department stores, and foodservice – seem to be turning the corner at least a bit, seeing significant gains over April in light of loosening restrictions on the state level, which are allowing such businesses to reopen or expand operations. However, sales were still well below 2019 levels and remain a notable cause for concern for the economy in general.  

Economists and other interested parties – including Freedonia analysts – will be closely monitoring next month’s retail sales report to see the strength of sales growth for June, looking for signs of just how many consumers returned to shop once businesses reopened.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the COVID-19 with a comparison to historical recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19