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.

Surging Demand Spurs Sawmill Owners to Increase Production Capacity

As noted frequently on this site, lumber demand has risen sharply during the pandemic, fueled by strong growth in new housing starts and increases in home improvement and repair activity, particularly among DIYers. Lumber prices have climbed to record heights as home builders, contractors, and homeowners have scrambled to obtain materials for a wide range of products. This shortage of lumber – and its high price – is a threat to the US economy as it climbs out of the pandemic, as delayed or canceled projects threaten thousands of construction-related jobs across the US.

Thus, it was welcome news when two leading North American lumber suppliers announced plans to expand production capacity at sites across the US.

  • Interfor announced plans to expand production capacity a sawmill in Perry, Georgia
  • West Fraser Timber announce plans to expand lumber production at five sawmills in the South (as well as two US OSB mills)

These planned capacity expansions will provide much needed relief to the US lumber market, expanding supplies and hopefully directing prices to historically more normal levels. Furthermore, as these mills ramp up lumber production, demand for the timber needed to make lumber will rise. This will in turn stimulate logging activity, which has remained sluggish due to low prices.

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 and Consumer Goods areas. 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.


Industry Groups Spar Over the Cause of High Lumber Prices

Lumber prices have remained high for several months, with supplies of lumber equally low. This is a special concern of home builders across the US. Shortages of lumber have affected the production of new homes, while climbing lumber prices threaten to make the residences that are completed unaffordable for many consumers. Considering that demand for homes – both newly built ones and existing residences – has never been higher, the lack of available lumber and its high cost when in supply has left all industry parties looking for solutions.

One idea floated by some is for the US to reverse the tariffs levied on Canadian-made softwood lumber. Because of these tariffs, many Canadian firms stopped selling lumber to the US, and those that did suffered sales declines as their lumber was now much more expensive.

Recently, the US Lumber Coalition – a group representing US producers of softwood lumber – put out a press release detailing what it thought were the causes of high homes prices, which included:

  • high labor costs
  • rising land prices
  • the overall increase in demand for all other wood-based building materials – not just lumber

The US Lumber Coalition reported that lumber was only a small part of the cost of building a new home, and that its members were doing their part to ameliorate the shortage of lumber by maximizing production. Furthermore, the US Lumber Coalition claimed that ending the tariffs on Canadian-made lumber would do little to reduce lumber prices, but would greatly affect US lumber producers, who would be hard-pressed to compete with Canadian suppliers.

In response, the National Association of Home Builders (NAHB) – whose members are among the largest consumers of lumber in the US – issued a press release that challenged many of the findings of the US Lumber Coalition, such as:

  • lumber and wood products play a much larger role in home building
  • sawmills did not ramp up production as rapidly as needed in response to surging lumber demand

The NAHB, in turn, called for the lifting of tariffs on Canadian lumber, claiming that the US does not have sufficient production capacity to meet its domestic market needs. Furthermore, by allowing more Canadian lumber into the US, not only would supplies increase, but costs would go down, making lumber – and new homes – more affordable.

Freedonia Group experts will continue to monitor the US lumber market and how lumber supplies and pricing continue to affect the overall US home building and construction industries.

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 and Consumer Goods areas. 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.


Home Remodeling Activity At High Level, Expected to Remain So Going Forward

Amidst all of the talk of high lumber prices, supply chain difficulties, and the challenge of finding skilled workers for many construction jobs, it is easy to forget that the US home remodeling market remains strong, as US consumers continue to invest in fixing and improving their residences. For instance, in the February-March edition of The Freedonia Group National Online Consumer Survey, 35% of respondents noted they were currently undertaking a home improvement project because of the coronavirus pandemic (aided, no doubt, by stimulus funds delivered this spring).

Even as it appears that the US is slowly turning the corner on the coronavirus pandemic, remodelers across the country report surging sales – and those looking to engage their services report long delays in scheduling the work. A pair of recent articles indicate that this surge in activity is expected to continue going forward.

The first reports that the Kitchen and Bath Market Index – an indicator of the confidence of the kitchen and bathroom remodeling industry – was at its highest recorded level in the first quarter of 2021. The Index, a survey of designers, contractors, manufacturers, and retailers, shows that demand for their services remains elevated. Homeowner interest in these projects remains high as consumers renovate their homes to meet changing conditions caused by the COVID-19 pandemic. From adding bathrooms to accommodate extra family members to remodeling kitchens to include space for a home office/classroom, homeowners are willing to invest in their homes – and kitchen and bathroom professionals are more than ready to do so (once they have the time).

The second reports that overall home remodeling activity is expected to post strong growth throughout the rest of 2021 and into 2022. While kitchen and bathroom activity will account for a significant share of this, other projects will also play a role. Such renovations as adding a deck or swimming pool, converting a little-used room into a home gym or office, or even just the decision to upgrade their home by repainting or installing a new floor are among those that will be undertaken by a homeowner. This, in turn, will drive demand for a wide range of building and construction materials, from cabinets to paint to flooring materials.

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.


Pandemic-Era Interest in Health Has Boosted the Plant-Based Foods Industry: New Developments

  • Beyond Meat introduced an improved version of its flagship product – Beyond Burger 3.0 – that  is due to appear in grocery stores in May and in restaurants in June. The company has continued to improve the taste and texture of its products with the goal of converting more meat-lovers, particularly once they reach price parity with beef (a goal they hope to achieve by 2024).
  • Beyond Meat is developing a chicken alternative product that will possibly launch this summer. The company had previously offered a plant-based chicken product through KFC but was not available through retail.
  • Epicurious announced that it stopped publishing new beef recipes in 2019 as part of an effort to encourage more sustainable cooking and that it now includes a wider variety of vegetarian, vegan, or simply plant-forward recipes.

The February-March edition of The Freedonia Group National Online Consumer Survey highlighted pandemic-era interest in eating better as 37% of respondents said they were eating more healthy because of the pandemic. This trend, coupled with more consumers looking to eat in a more healthy way, willing to try new foods, and curious about or actively looking to live more sustainably, will continue to propel the plant-based food industry forward.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area, with titles such as Frozen Food Packaging, Vacuum Skin Packaging, and Meat, Poultry, & Seafood Packaging.

Further analysis in Food & Beverage research is also available from our sister publisher Packaged Facts, with titles such as Vegan, Vegetarian, & Flexitarian Consumers; Meat, Poultry & Seafood Alternatives: Outlook for Plant-Based & Cultured Cell-Based Consumer Products; Dairy & Egg Alternatives: Outlook for Plant-Based & Cell-Cultured Consumer Products; and Home Food Gardening: U.S. Market Trends & Opportunities. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage    

Packaging & Foodservices Operators: Quality, Costs, & Sustainability Remain Hurdles as Takeout Still Dominates

Operators of cafeterias and restaurants are both still grappling with the ideal carryout packaging more than a year into the pandemic-driven push toward takeout.

  • Initially, they used whatever containers they could get as demand spiked above supplies.
  • The next step was to optimize the package for food quality, retaining food temperature, minimizing spills and leaks, maintaining appearance, and even including tamper evident features.
  • However, the packaging still has to be cost effective, particularly for school cafeterias and low-priced restaurant options, both of which have limited room in their budgets.
  • Once the basics were satisfied, sustainability became a factor – can the packaging be compostable, reusable, or recyclable while remaining functional and within an affordable price?

The rising prices of paper and plastic packaging have made reusables more appealing because it takes fewer uses for the container to become a better deal in terms of costs. However, facilities that go with reusable options must have sufficient dishwashing capacity and be able to handle collection of used containers (or partner with a firm that can handle both tasks).

Reusables also require buy-in from consumers in terms of an upfront or ongoing membership or in terms of changing habits, as many consumers are used to simply tossing their to-go containers. Still, as many households saw a flood of disposable carryout containers fill their garbage bins over the last year, more consumers might be primed to make a few sustainability shifts in their lives. According to the February-March edition of The Freedonia Group National Online Consumer Survey, 44% of respondents agreed that their household was putting more household waste out for garbage pickup since the start of the pandemic. What consumers notice, they are more likely to prioritize and address.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area, with titles such as Foodservice Single-Use Products, Global Foodservice, Global Foodservice Single-Use Products, and US Restaurant Reopening: COVID-19 Impact on Supplies. Additional analysis is available from the Food & Beverage research from our sister publisher Packaged Facts, including titles such as Food Carryout & Delivery. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage      Packaging