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.

Starbucks Adapts: Closing Up to 400 Conventional Stores & Accelerating Implementation of “On-the-Go” Store Format

Classic Starbucks cafes are not going away. However, even ahead of the coronavirus pandemic which temporarily closed dine-in foodservice, Starbucks was already developing alternative store formats. More drive-thru or walk-up carryout windows, and pickup locations are being rolled out in response to long lines in densely populated areas, intense interest in on-the-go coffee and snacks, and the rise of app-based ordering.

The company told CNN that about 80% of transactions at nearly 15,000 US stores are "on-the-go" purchases. "Covid-19 has actually allowed us to accelerate the plans we already had on the books… Our vision is that each large city in the US will ultimately have a mix of traditional Starbucks cafés and Starbucks Pickup locations.”

This ongoing shift toward on-the-go consumption of coffee and other food will require more disposable foodservice products, including cups and lids, plates, bowls, wraps, napkins, bags, and flatware. As more companies put out goals of moving toward a more circular and environmentally friendly economy, but still need single-use product, packaging companies have opportunities to innovate, particularly if they are able to bring down prices of these items.

For more information, see The Freedonia Group’s reports on Foodservice Single-Use Products, Retail Bags, Global Foodservice, and our sister publisher Packaged Facts’ reports including Food Carryout & Delivery and Food Carryout & Delivery: Special COVID-19 Consumer Insights.

  Consumer Goods      Covid-19    

RVs: the New Mobile Office & Socially Distant Travel Option

RV industry leader Thor Industries recently reopened manufacturing facilities after shutting down due to shelter-in-place regulations in mid-March to an enthusiastic market. Key factors driving sales gains in this market as dealers reopen include:

  • The idea of “work from home” can be moved to “work from anywhere” as many office jobs can be done in any location with an internet connection and RVs can act as mobile offices.
  • Essential workers can use RVs to avoid cross contamination between work and their homes.
  • RVs allow travelers to do socially distant travel by avoiding high density areas such as airports and hotels and gives them greater control of their environment and possible exposures.
  • Recreation dollars are being reallocated – if consumers cannot go to traditional vacation destinations, children’s camps are canceled, and sporting events are not an option, the 20% down payment no longer seems like an obstacle to ownership.

Although RV owners have traditionally included families and retirees, younger people – including younger couples without children – have increasingly accounted for a greater share of RV owners. These trends are likely to increase the participation by this demographic.

For more information, see The Freedonia Group’s report Recreational Vehicles. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19    

Potential Long-Term Effect of COVID-19 Pandemic – A Shift Away From Central Cities?

Over the past decade, America’s cities have seen something of a revival, and in part this has been fueled by an increase in the numbers of people who have chosen to live in “downtown” communities. From young professionals to empty nesters, more people are looking to be closer to the entertainment and cultural amenities they desire. This has spurred construction of high-rise apartments and condominiums in central peoples to meet this demand for living space.

However, this may be changing, as many people are increasingly wary of living urban centers, as many more densely populated parts of the US were most affected by the COVID-19 pandemic. Indeed, people moving out of urban cores into nearby neighborhoods or into the suburbs altogether will spur a number of changes to the US residential construction market in the near term. These changes may include:

  • a general uptick in remodeling activity as older structures are rehabilitated and upgraded to make them more welcoming to potential new tenants or owners
  • an overall increase in the size of residences – there is more space to build – that will support demand for such building materials as lumber, roofing, siding, flooring, and drywall
  • interest in adding outdoor amenities to residences, such as decks, outdoor kitchens, and other outdoor features (such as pavers or pergolas)
  • growth in consumer spending – consumers are likely to accumulate more possessions when they move into larger residences, as they have more space to store things

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.

  Construction & Building Products      Consumer Goods      Covid-19    

The “R” Word — It’s Official

In an announcement that surprised absolutely no one, the National Bureau of Economic Research declared on Monday June 8 that the US dropped into a recession after economic activity hit a monthly peak in February 2020. This expansion lasted 128 months, dating back to June 2009, the beginning of the last recession. It was reported to be the longest expansionary business cycle since such records began in 1854; however, it was also noteworthy for generating unspectacular annual growth rates.

A recession is typically understood as two consecutive quarters of economic contraction. Although the US has not yet officially registered a second consecutive quarter of decline in economic activity, it is a foregone conclusion given the depth, breadth, and speed of the contraction.

Economists expect that we are likely already in recovery – from a very low base – on a monthly basis now that large segments of the economy are reopening. With the economy registering 2.5 million additional jobs in May, this could end up being the shortest and the deepest recession on record. Although even the smallest movement in the positive direction would be enough to officially end a recession, there is still a long way to go before returning to pre-recession levels.

Although the expected speed of the recovery is being actively debated, many believe that further economic good news awaits. Consumers – having been cooped up in their homes for weeks on end – are starting to dine out and shop in stores in person. For instance, a recent survey showed consumers were not only looking forward to going to eat in restaurants but were planning on spending more to broaden their palates. Seasonal shopping for things such as outdoor recreation products and gardening supplies will further contribute to consumer spending activity. Additionally, reopened businesses are expanding output and often seeing sales gains.

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, as well as US and global macroeconomic updates surrounding the pandemic. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19    

Economic & Survey Data Suggest Some Effects of COVID-19 Pandemic Passing

The US received an unexpected bit of good news Friday when it was revealed that the nation’s jobless rate had declined in May as many states loosened – or eliminated altogether – the various shelter-in-place measures enacted in March when the coronavirus began widespread infections. Businesses across the nation have begun to recall furloughed employees or, in some cases (such as grocery stores, janitorial businesses, and home delivery operations), added staff to meet burgeoning demand for their services.

Surging new home sales for May also indicate the pent-up buying power of the consumer. While some of this activity reflects the fact that fewer homes were sold while potential buyers were in quarantine, this sharp increase in new homes sales indicates that many US consumers – perhaps tired of living in less spacious apartments or other such rental properties – were ready to buy their own homes. This is especially good news, as people tend to make other purchases after buying homes, such as:

  • appliances
  • lawn mowers and other gardening equipment
  • furnishings
  • other necessities, such as paint, curtains, and rugs

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.