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.

COVID-19 Pandemic Continuing to Shape Home Design Trends

As frequently chronicled in this space, the coronavirus pandemic has caused a number of changes to the US construction industry, as builders, remodelers, and designers adapt to the changing needs of home buyers and owners alike.

A recent study by the National Association of Home Builders revealed that the pandemic is continuing to shape the market even as there are signs that the disease is lessening its grip on the US economy. Residences erected in 2020 averaged nearly 2,500 square feet and had larger numbers of kitchens and bathrooms, indicative of consumer desires for more space, enhanced privacy, and – possibly – the need to accommodate more family members under one roof due to the economic and social dislocations of the pandemic.

The study also indicated that consumers increasingly wanted such features as:

  • more kitchen amenities, such as walk-in pantries and double sinks, as more meals were prepared at home
  • larger porches and patios to safely entertain and accommodate guests and visitors
  • ceiling fans to promote air circulation – increasingly seen as a key method of combatting the spread of the coronavirus
  • energy-efficient doors and windows and appliances – homebound consumers were more conscious of the need to reduce energy use and lower utility bills

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.

COVID-19 Pandemic Changing Table Model of Restaurants

Perhaps no segment of the US has been more affected by the pandemic than that of the restaurant industry. Restaurants that specialize in sit-down, table service have found their entire business model challenged, while fast-food and fast-casual restaurants have had to adjust their business models to one serving carry-out and delivery customers. Furthermore, nearly all US restaurants have had to make significant investments in personal protective equipment, cleaning supplies, partitions, and disposable packaging to continue in operation.

One restaurant change that will be permanently changed by the pandemic is Steak ‘n Shake, which announced that it would be converting its restaurants from offering table-side service to one customers will serve themselves. Rather than give their orders to a server, customers will use a touchscreen kiosk to order and pay for their meals.

This switch offers a number of potential advantages to restaurant owners and managers, such as:

  • reduced labor costs, as fewer employees will be needed
  • enhanced safety for workers and guests, as there will be minimal interaction between customers and kitchen crews
  • improved operational efficiency – a far lower risk of lost orders or errors by kitchen staff in transferring orders to point-of-sale (POS) systems

However, the change also offers an element of risk:

  • Some customers – especially those who are older or less technologically savvy – prefer to order through a server, rather than enter their own orders.
  • The chain will be less likely to be perceived as a sit-down restaurant and more of a quick-service chain.
  • Many restaurant owners and managers may not have the funds to make further investments in their facilities right now.

Many restaurants are making adjustments to their plans and their facilities to enable more efficient carryout and delivery operations and to better accommodate third-party delivery firms (e.g., Uber Eats, GrubHub). However, time will tell as to the success of this initiative and if other chains will follow in the footsteps of Steak ‘n Shake to convert tableside ordering service to a reduced contact, tech-centered model.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including US Restaurant Reopening: COVID-19 Impact on Supplies, Global Foodservice,Foodservice Single-Use Products,Global Foodservice Single-Use Products, Retail Bags, Protective Packaging,Commercial Refrigeration Equipment, and Global E-Commerce Packaging. Related reports from our sister publisher, Packaged Facts, include Food Carryout & Delivery, Food Carryout & Delivery: Special COVID-19 Consumer Insights, Consumer & Corporate Food Gifting in the US, US Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus, Global Food E-Commerce, and Online Grocery in the US. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Decking Market Expected to Remain Bullish in 2021

Last month on this blog we mentioned that strong demand for decking had spurred Trex – a leading supplier of wood-plastic composite (WPC) decking – to expand one of its manufacturing sites, boosting its annual production capacity. The company recently released its fourth quarter sales report, with results that seem to have more than justified that decision, with a nearly 40% increase in sales. This growth was mainly driven by sales of residential products. Furthermore, Trex expects that sales of its decking products will remain strong going forward, , as homeowners continue to install decks to add outdoor living and recreational space.

In addition to rising sales of WPC decking, demand for decks made from pressure-treated lumber (the most commonly used decking material in the US) will also post gains going forward. Consumers, particularly homeowners contemplating DIY projects, will continue to select natural wood lumber because of its low cost and favorable aesthetic properties. Indeed, this expected increase in wood decking demand has caused firms to expand their presence in the market.

One such move was made by UFP Industries, which announced its was acquiring Spartanburg Forest Products, a producer of pressure-treated lumber, decking accessories, and other related wood products. The acquisition will expand UFP’s network of pressure-treated lumber treatment facilities, helping to make sure that the company will be able to meet strong demand for pressure-treated lumber decking materials going forward.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Wood & Competitive Decking,Outdoor Furniture & Grills,Outdoor Kitchens,Fencing,Residential Fencing, and Plastic Fencing (Lumber report coming soon). Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Biden Administration to Investigate Global Supply Chain Issues

On February 24, US President Joe Biden signed an executive order mandating that federal agencies conduct a 100-day review of critically important supply chains, as the COVID-19 pandemic has raised focus on issues regarding access to certain products and materials generally sourced from abroad (and particularly those from China).  The review will focus specifically on four items, some of which have faced supply chain problems even before the pandemic:

  • Semiconductors:  Access to these chips, which are used for multiple purposes in motor vehicles and also are essential components of iPhones, personal computers, smart TVs, gaming systems, and more, increasingly became a problem during the pandemic. As remote working became more commonplace, demand for these chips increased greatly to accommodate the need for more personal computers and laptops. Additionally, trade restrictions placed on imports from China also caused difficulties, as many of China’s leading chip manufacturers had export restrictions placed on them by the United States. Additionally, some of these companies claim plans to expand manufacturing to the United States have been hindered by national security concerns raised by the Committee on Foreign Investment in the United States (CFIUS), due in part to the possible military applications of these products. The US-based Semiconductor Industry Association claims that the US’s share of global semiconductor manufacturing has fallen from 37% in 1990 to 12% today, and US manufacturers are pushing the White House to work with Congress to provide investment that they claim will support research and design operations and to increase domestic semiconductor production.
  • Pharmaceuticals: Shortages in certain drugs during the pandemic has also prompted a deeper examination into the pharmaceutical supply chain. A combination of increased demand for drugs to address the rising number of hospitalizations and the shutdown or slowdown of some international shipping ports led to key shortages. There are also concerns about being too reliant on China for key pharmaceutical ingredients, which has doubled over the last decade
  • Electric vehicle batteries: Global manufacturing of electric vehicle batteries is currently heavily concentrated in China, with Japan and South Korea ranking numbers two and three leading manufacturers, and the US back at number six, according to a report from S&P Global. With major US automobile manufacturers increasingly focusing on electric vehicles – including General Motors, which has announced that it intends to phase out all gas-powered vehicles by 2035 – reliable access to these batteries will be crucial in the coming years. 
  • Critical minerals: Rare earth minerals are used in a wide variety of applications, including airplanes, steel, light bulbs, wind turbines, and many more. Supply chain issues for these minerals long predate the COVID-19 pandemic, as China is the leading global producer of rare earth minerals. This problem of production being so heavily concentrated in a single country has been intensified by some of the Chinese government’s behavior in the past, including a brief restriction of rare earth exports to Japan in 2010 in response to a dispute in the East China Seas. These concerns have led to increased efforts from the rest of the world to ramp up rare earth mineral production, which has lowered China’s share over the last decade from around 98% down to 63%. In a continuation of efforts from the Obama and Trump administrations, Biden’s executive order will examine means of addressing weaknesses in the rare earth minerals supply chain. This will likely include both strengthening the US rare earth mineral industry and transitioning reliance on imports to countries with whom the US has friendlier reliance – primarily meaning a transition away from China.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Construction & Building Products      Consumer Goods      Covid-19      Energy & Petroleum      Food & Beverage      Industrial Components      Machinery & Equipment      Metals      Packaging      Plastics & Other Polymers      Tariffs      Textiles & Nonwovens    

Challenges Await to Biden Administration’s Made-in-America Push

The Biden administration has expanded on the “Buy American” trend pushed by the Trump Administration by signing the “Made in America” executive order, which, among other things, called for:

  • increasing the cost saving threshold required for federal contracts to purchase from non-US suppliers
  • stricter enforcement of existing Buy American policies, including closing loopholes that allowed companies to offshore manufacturing while continue to qualify for domestic preferences, for example by having 51% of a product’s materials sourced domestically

The goal of these policies is to ensure that taxpayer-funded federal spending is used to invest in domestic manufacturing, create US jobs, and strengthen national security. However, these policies are likely to face challenges – particularly in the short term – such as:

The impact of the Made in Executive order has the potential to become far more substantial should the Biden administration be able to sign into law vast infrastructure and/or energy bills, which would vastly increase the amount of federal spending impacted by the new regulations.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.