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.

Building Material Retailers & Lawn & Garden Suppliers Continue to Be a Highlight in US Retail Sales Figures

One statistic of note from the May 2020 monthly retail sales release was the sharp increase in sales from such retail establishments as building materials suppliers and lawn and garden retailers. These segments posted sales increases that were up over 15% from April to May 2020. More interestingly, on a year-by-year basis, retail sales by building materials suppliers and lawn and garden retailers were up over 17% compared to 2019.

While some of this is due to the normal pickup in building construction activity in spring as the weather improves, this sharp increase in sales is also due to:

  • an uptick in DIY projects – many people took advantage of time spent at home to engage in long-delayed home improvement projects such as adding decks, rearranging rooms into home gyms or home offices, and painting walls
  • the declaration by many state and local governments of construction as an “essential” industry, allowing most – if not all – projects to continue going forward (albeit at a reduced pace due to social distancing and the more frequent sanitizing of tools and equipment)
  • homeowner interest in investing in their living space to better entertain themselves, such as by installing pools and spas, decks, and other outdoor amenities

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 pandemic with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Construction & Building Products      Consumer Goods      Covid-19    

How Are Retailers Adapting to the New Environment as They Reopen?

Retailers are reopening across the country as stay-at-home orders lift. However, they continue to face state and local restrictions and are also reopening to a concerned customer base that might be reluctant to shop the way it used to. As a result, retailers are working to adapt their businesses to the new environment. Examples include:

  • Offering curbside pickup – moving beyond restaurant meals to include other types of retail buying
  • Boosting e-commerce capabilities – most of those who didn’t have it pre-pandemic are now offering it; those who did have it have been expanding their capabilities and making platforms both more sophisticated and more user-friendly
  • Touchless sales/reduced in-person contact – beyond e-commerce, businesses are using vending machines, self-checkout lines, and mobile payment options
  • Bundling – assembling craft, cooking, or DIY home project supplies into kits with online instructional videos
  • Partnering – signing up with a third-party delivery business or third-party e-commerce platform, and working with complementary local businesses
  • Changing the physical space – measures are varied and include installing plastic dividers, spacing out racks of goods, and even petitioning local governments to allow operations on sidewalks
  • Rethinking the product mix – considering what consumers need now and figuring out a way to fit that into their business model to increase revenue and get people looking at other products (e.g., clothing retailers adding fashionable masks and refocusing to casual attire and loungewear)

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.

  Consumer Goods      Covid-19    

Peak Oil? Has the Pandemic Changed the Way We Work & Live That Much?

BP noted in a statement Monday that the health crisis could have an “enduring impact on the global economy”, resulting in less demand for energy over a “sustained period”. As a result, the company reduced its forecast for Brent crude prices over the next three decades by 27% to $55 per barrel. The company expects that the world will emerge from the pandemic with an accelerated transition to a lower carbon, cleaner energy system in light of efforts to “build back better” for greater resilience in the local economies.

As the coronavirus pandemic sharply reduced demand for oil and gas – with factories closed, travel curtailed, and workers remaining at home – Brent crude price collapsed to its lowest level in over 20 years in April. Although that price has more than doubled since April, it is still down 42% from the end of 2019.

The International Energy Agency said last month that oil demand could drop by 9 million barrels a day this year on average, returning consumption to 2012 levels. While consumption is beginning to increase as stay-at-home restrictions ease, energy companies expect reduced consumption for a longer period of time. Some energy economy watchers think that global oil demand may never return to pre-pandemic levels.

So have we reached peak oil? Freedonia analysts think so. Our current composite forecasts have US refined oil product consumption in volume terms peaking in 2018.

Why might this change be more than temporary?

  • Telecommuting will remain widespread, where possible, for the foreseeable future.
  • Business and pleasure travel will remain down, partly due to ongoing quarantine procedures as well as individual reluctance to risk it, and partly as video conferencing becomes more entrenched as an alternative to in-person business meetings.
  • Subsidies and other coronavirus economic support packages have, in some countries, included new environmental commitments and carbon reductions as conditions for such payments.

However, this doesn’t mean that there will be a quick and large-scale shift to renewables. This is still largely a demand-side issue at this point. Cheap oil – a situation we’re in right now – makes renewables less cost-competitive when there aren’t other incentives to make the switch.

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.

  Chemicals      Covid-19    

Empty Hotels & Restaurants Provide Challenges & Opportunities for Construction Market

As the US begins to show signs of an economic recovery, the fact remains that in a number of industries, this recovery may only be a partial one. For the hotel industry – both in New York and elsewhere in the US – many properties that closed because of restrictions on travel and tourism in the wake of the COVID-19 pandemic will not reopen. Similarly, many of the nation’s restaurants that closed as state and local governments tried to limit foot traffic to minimize the spread of coronavirus will also not resume business. Indeed, with 75% of all restaurant operators saying that they do not expect a profit for the rest of the year, it is to be expected that some eateries now open for business will not make it.

These reports indicate a key challenge to the US building construction industry – namely, thousands of hotel rooms and hundreds of restaurants are built in the US in any given year. How will firms react when there is not a need to build new hotels and restaurants because there is a glut of – in many cases – suitable structures awaiting tenants? Some companies will adjust by refurbishing these sites (as needed) in expectation of a return to an economy that looked like the one before COVID-19.

Other construction firms will adapt by looking to ways to repurpose existing properties. For instance:

  • The shortage of affordable housing across the US – especially in cities – may spur the conversion of hotels and vacant office buildings into multifamily housing units.
  • Closed restaurants may be converted into “pop-up” restaurants that require periodic refurbishment.
  • Local and state governments may convert existing structures to medical facilities – such as hospitals or community health clinics – as a way to better handle future pandemics.

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. 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.


3M Files More Lawsuits Against Resellers of Their N95 Respirators

3M, the leading supplier of N95 respirators which can block 95% of very small particles including droplets containing COVID-19 novel coronavirus, filed another lawsuit on Monday. The company has issued dozens to date alleging price gouging, trademark infringement, and false advertising. The newest lawsuit is against a reseller who is alleged to have offered 3M masks for more than 18 times their list price.

N95 masks have been considered essential equipment among front line responders and healthcare providers during the COVID-19 pandemic. However, the market has been flooded by subpar products, including counterfeit 3M branded products, many of which have been offered at excessively high prices.

In addition to filing these lawsuits, 3M has been working with technology companies to remove more than 3,000 offers for masks it believes to be counterfeit that have appeared on various social media and other e-commerce platforms.

For more information, see The Freedonia Group’s COVID-19 impact reports on Global Disposable Masks & Respirators, Global Medical Face Shields, Global Disposable Medical Gloves, and Global Industrial & Institutional Disinfectants & Sanitizers.

  Consumer Goods      Covid-19      Textiles & Nonwovens