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.

Booming RV Industry Benefits Supplier Industries Too

The recreational vehicle industry is booming as Americans look for ways to vacation while limiting potential COVID infection points such as hotels, restaurants, and public restrooms. An investment like this has become increasingly attractive to the many travelers who are unsure they will ever be taking long trips packed with other travelers into a train, a bus, or an airplane or at least not for the foreseeable future.

Families are also using these as places to work remotely or as a classroom space for children who are not yet able to join a conventional classroom setting.

Others are finding the open road to be an attractive place to work. This trend, which had already been underway, is expanding as many white collar workers are now untethered from the conventional office space due to the pandemic and many offices are expecting to have generous work-from-home plans for the next year or beyond.

So beyond the RV manufacturers and vendors, themselves, who else also benefits from this boom?

  • Vehicle companies that make the base chassis of converted vans and motorhomes
  • Suppliers of engines and electric power generators as well as tires and other vehicle components
  • Suppliers of construction elements such as cabinets, countertops, flooring, plumbing fixtures and fittings, small sizes of kitchen appliances, lighting fixtures, and coated fabrics for awnings, pop-up tent components, and all-weather upholstery
  • Suppliers of creature comforts such as consumer electronics and furniture, from couches and tables to beds
  • Suppliers of outdoor recreation products – e.g., grills, outdoor chairs & tables, motorcycles – which are used along with recreational vehicles

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in Construction and Building Products and with reports such as Outdoor Furniture & Grills, Global Motorcycles, Global Diesel Engines, Global Buses, General Purpose Lighting Fixtures, and Recreational Vehicles. 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.


Surging Second Quarter Sales For Home Improvement Retailers Show Power of DIY Consumer

Three of the nation’s leading home improvement retailers reported large gains in sales for the second quarter of 2020 – reporting growth that would have been unfathomable at the beginning of the quarter, when the US was buffeted by reports of closures, shutdowns, and stay-in-place orders:

  • Home Depot reported a 25% increase in sales, with 13 of 14 product categories showing double-digit growth in the quarter
  • Lowe’s reported that its second quarter sales rose over 35%, spurred by improvements in its online sales platforms
  • Ace Hardware also posted a 35% increase in sales for the second quarter of 2020, with sales of outdoor power equipment, power tools, and grilling products seeing the fastest growth

These strong sales were largely supported by the do-it-yourself (DIY) customer and smaller contractor/handyman groups, as major construction activity was curtailed – if not almost completed halted – by state and local governments across the US. Homeowners with abundant time on their hands were able to complete long-desired home improvement projects (such as painting rooms, completing decks, installing patios) or even begin new projects, such as converting little-used spaces into home offices and gyms, and starting gardens.

As noted repeatedly by TFG analysts, this surge in DIY activity has driven demand for a wide range of building materials, tools, and various elements of outdoor gardening and landscaping projects, boosting prices as demand for these items has often outstripped supply. Consumers will continue to see shortages of some of these items as construction activity is expected to pick up over the rest of the year. Indeed, these shortages and price hikes may be the only factor that can slow down the power of the DIY consumers as homeowners may consider other projects or make other investments if they cannot complete home improvement projects within their budgets.

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 with reports such as Power Tools, Hand Tools, Outdoor Kitchens, Outdoor Furniture & Grills, Sheds & Other Outdoor Storage, Lawn & Garden Consumables, Lawn & Garden Watering Products, Global Power Lawn & Garden Equipment, and Lawn & Garden Consumer Insights: The Home Gardener. 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.

  Construction & Building Products      Consumer Goods      Covid-19    

Popcorn Sales Spiking From Pandemic Era Scrolling, Streaming, & Snacking

Top suppliers of microwave and unpopped raw popcorn are reporting huge increases in sales since the US entered the lockdown period in March. Consumers can’t watch movies at theaters, so they’re recreating the experience – including the popcorn – at home.

In our Packaged Facts national online consumer survey conducted in May:

  • 58% agreed that they were seeking more comfort foods because of the pandemic.
  • 42% noted that they were eating in a more healthy way because of the coronavirus pandemic.
  • 57% noted that they were eating more snacks and treats, with even higher response rates among women and Gen Z, millennial, and Gen X consumers. These consumers – who are more likely to have children at home – were also more likely to be seeking comfort foods.

Popcorn hits that sweet spot as a comforting snack that has more of a health halo with its high fiber content compared to chips, crackers, and similar salty snack options. In addition, newer varieties are lighter or feature trendy coconut oil rather than butter or palm oil. Still, there are a lot indulgent popcorn varieties as well, from extra butter to salty-sweet versions featuring chocolate or caramel. Spicy pepper flavors are also being added to popcorn lines to keep up with that flavor profile trend in other snacks.

Greater screen time – scrolling, streaming, or general TV watching – is also definitely part of the spike in sales. Many people associate watching movies or binging on streaming series with snacking, and popcorn – a traditional theater snack – gets a boost here. The increase in the number of home viewing events this summer – from movies that would have been theater releases that are now being offered for online streaming to services such as Disney+ showing Hamilton and wide-variety of family-friendly releases – is also supporting sales.

Rising installation of outdoor movie equipment also helps popcorn sales by driving interest in simulating theater experiences at home, particularly as families look for another physically distant socializing option with friends and family or a way to give family members a vacation feeling without leaving home.

For more information and discussion of opportunities, see Packaged Facts’ food- and beverage-related reports, including Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus. The Freedonia Group’s Packaging research provides a strong complement to packaged food industry analysis. Freedonia Custom Research is also available for questions requiring tailored market intelligence

  Consumer Goods      Covid-19      Food & Beverage    

New Housing Market Shows Strength During COVID-19 Pandemic

While the US economy continues to struggle to recover from the effects of the COVID-19 pandemic, there are a few bright spots. One of these is the new housing market. Many people across the US – which is already facing a shortage of homes for potential buyers – seek to escape urban centers that were among the areas most affected by the coronavirus in the early stages of the pandemic. Others – perhaps tired of apartment life or realizing that they can work remotely – would simply prefer a residence of their own.

Due to this high interest in homeownership, homebuilder confidence reached a record high in August at levels not seen in over three decades. In addition to strong demand, low interest rates have made mortgages highly affordable for many consumers, who can obtain the financing they need once they find a home to purchase. Because of these factors, the nation’s homebuilders have worked – despite a shortage of lumber – to quickly erect new homes.

Indeed, this heightened interest in home buying has caused an unexpected difficulty for the nation’s homeowners. Many owners – looking to refinance their existing mortgages – have been unable to so as lenders have worked to service new homes loans that offer the possibilities of more profit. This may affect the construction market, as many homeowners take out funds while refinancing to engage in home improvement projects, reinvesting some of their savings on the mortgage into their residences. An inability to refinance will reduce the amount of money available for home improvements, though homeowners will be likely to invest in their homes when able.

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. 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.


July Retail Sales Report: Still Seeing Improvements, But at Slowing Rates

The July advance monthly retail sales report was released on August 14. 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 July report shows decelerations in most categories, even those that saw rapid gains in June over May. The differentials between 2020 and 2019 retail sales levels on a comparable month basis are narrowing in many cases too. This month reflects the impact of the resurgence in infections, mask mandates, and re-closures of some businesses in several states and municipalities.

The big winners overall continue to be the same ones from last few months. However, even as they continue to show strength against same month 2019 sales, they are off May 2020 highs and continued to fall or were relatively flat from June 2020’s lower levels:

  • grocery/food retail stores -- July 2020 was +0.2% from June 2020, which was 1.5% below May 2020 levels; and July 2020 was still +11.1% from July 2019
  • building materials/garden equipment dealers -- July 2020 was -2.9% from June 2020, but still +14.8% from July 2019
  • retailers that operate outside of brick-and-mortar locations (including e-commerce not linked to conventional stores) -- July 2020 was +0.7% from June 2020, which was below May 2020 levels; and July 2020 was still +24.7% from July 2019

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. Consumers are still largely limiting their shopping to these types of retail outlets.   

Sales at sporting goods, hobby, musical instruments & book stores, which saw rapid gains in June 2020, experienced sales decline from that spike in sales during July. This category is -5.0% from June 2020, even as revised June retail sales were +27.6% from May 2020. Still, sales at these retail outlets in July 2020 was +20.9% from July 2019.

Several other categories are also showing still big gains over very low previous month sales levels, even though they are still seriously lagging 2019 same-month sales. In July, the notable example was electronics and appliances stores, which were +22.9 from June 2020, but -2.8% from July 2019.

Other outlets have sales levels moderating after huge spikes in sales from May to June, lining up with such businesses reopening. For instance,

  • furniture stores – July 2020 was flat compared to June 2020, but June was +37.4% from May 2020; and July 2020 was still -0.7% from July 2019
  • gas stations – July 2020 was +6.2% from June 2020, but June was +14.8% from May 2020; and July 2020 was still -15.6% from July 2019
  • clothing stores – July 2020 was +5.7% from June 2020, but June was +98.8% from May 2020; and July 2020 was still -20.9% from July 2019. These troubling sales levels are reflected in a large number of big-name clothing retail bankruptcies.
  • foodservice – July 2020 was +5.0% from June 2020, but June was +26.7% from May 2020; and July 2020 was still -18.9% from July 2019. Bankruptcies are hitting this segment hard too, with a few lists here and here.

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 August, looking for the impact of the unusual back-to-school season in an era of mask mandates and remote schooling in many local districts.

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. Food- and beverage-related reports are also available from our sister publisher, Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19