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.

Worker Shortages & Need for Efficiency Propel Automation, Big Data, & Other Changes in Agriculture & Mining

If there’s one thing the COVID-19 pandemic has made clear, it’s that the effect that worker losses can have on productivity. As immigration has been limited, workers have sought jobs less exposed to pandemic infections, and more employees have had to take time off for illness, quarantine, or family care, companies have struggled to maintain output.

In an economy challenged by worker shortages – particularly in industries that have long been supported by immigrants and migrant workers – automation and efficiency are very high priorities.

While software as a service (SaaS) and leasing over ownership is a main feature in high-tech industries that expect to see frequent upgrades and product improvements, innovations are moving even those markets that have long seen as low-tech industries in this direction. To keep pace and ahead of that trend, companies such as John Deere are seeking to fundamentally transform both their businesses and product offerings in coming years.

With technological innovation revolutionizing farming, forestry, construction, and mining, Deere argues that customers now require more than just a piece of equipment. This could include:

  • hiring out the equipment as part of a comprehensive solution for farms, quarries, or mines
  • pairing increasingly automated machinery capable of collecting a lot of data about operations with advanced complementary technologies
  • management tools
  • maintenance services

With farmers and facility operators too busy or not sufficiently trained in data analysis to make the best use of all the data generated, equipment suppliers could offer data analysis services and digital platforms to make actionable data clear. Such offerings could help facilities operate more efficiently and sustainably.

However, such an integrated suite of equipment, software, and services could run into the user-side pressure for right-to-repair. Farmers and other users of heavy equipment have found that high-tech versions of equipment cannot be repaired by themselves or even by local shops, resulting in increased downtime when a problem arises. Not having operational equipment is a real drag on efficiency and could result in precious time lost during planting and harvesting seasons. Still, if equipment can be kept operational longer with less downtime by using remotely assessed software, that problem could be negated at least to a degree.

Freedonia analysts are carefully watching innovations in automation, efficiency, and right-to-repair as a way  to stay abreast of industry trends.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Machinery & Equipment area. Recent analysis is available covering topics such as Global Forestry Equipment, Global Mining Equipment, Global Off-Road Equipment Technology 2021, Global Power Lawn & Garden Equipment, and Global Power Tools, as well as Global Construction Equipment (coming soon). Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Continuing Declines in Sales by Building Materials Distributors: A Time to Worry?

The recent release of the August 2021 retail sales report by the US Commerce Department showed that sales by building materials and garden equipment and suppliers posted declines yet again in August, falling more than 4.5% in that month. While still up more than 15% compared to retail sales in this market segment last year, this decline in sales has prompted concerns among some in the industry.

To be sure, many of the declines in sales have an explanation:

  • Steep drops in lumber prices – in many places in the US they are at or below their traditional price levels – meant that sales of this key building material would fall in value (if not unit) terms.
  • The end of summer means that many construction professionals – especially in the northern half of the US – will be working less due to shorter days and the heightened prospect of inclement weather.
  • Consumer spending was concentrated on back-to-school supplies, and not necessarily those related to outdoor living and leisure (an important sales channel for many retailers).
  • The end of summer also means that gardeners wrap up their activities for the year and homeowners and landscapers generally cut grass and perform other lawn maintenance activities less.

Going forward, industry professionals can expect sales in this market to continue to fall. Construction seasons will continue to shorten, and contractors will purchase less material. In the gardening and landscaping segment, many crews will curtail activities or shift to other types of work – landscapers will get trucks and equipment for winter plowing.

Sales in the segment will be supported:

  • consumers’ fondness for Halloween activities, such as decorating yards and buying pumpkins – many retailers stock product lines in this category
  • consumer interest in preparing for winter – buying snow blowers, shovels, rock salt, and other items

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 Custom Research is also available for questions requiring tailored market intelligence.

Indoor Air Quality: The Next Infrastructure Shift?

If we designed a healthier waste, sewage, and water system to make cholera history…

If we installed window screens, used pesticides, and managed standing water to reduce insect-borne illnesses such as yellow fever, malaria, West Nile, Dengue, Zika, and others…

How did we manage to forget indoor air quality?

Was it because allergies were seen as seasonal or easily treated?

Was it because colds and flus were seen as something that didn’t remain in the air, but had more to do with spread by contaminated contact?

Or perhaps illnesses stemming from indoor air quality were seen as mostly just irritating for most people so something we lived with rather than addressed directly?

With the COVID-19 pandemic, the construction industry along with building owners might be finally taking indoor air quality – especially filtration and ventilation – seriously as a public health measure in buildings everywhere. The pandemic made more consumers aware of the difference that appropriate ventilation and filtration can make in the health of building occupants.

Increasingly, schools, offices, retail stores, and restaurants are using these improvements to market their location as safe and as a place people can feel more comfortable working in-person, lingering over dinner and drinks, browsing sales racks, or bringing their children indoors. Similarly, many also promote their cleaning processes or list the brand of disinfectant they use to communicate that this is a safe location.

LEED certified buildings more specifically consider filtration and ventilation. However, most buildings are set to minimum code requirements (which are typically based on standards developed by ASHRAE) and are most interested in heating and cooling capacity. Will this be the moment that turns high level IAQ issues into a priority for all buildings, including retrofitting existing buildings? Freedonia analysts continue to monitor changes in thinking – from building codes to costs to owner/occupant demand.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global HVAC, Global Filters, Consumer Air Treatment Systems, and Indoor Air Quality Equipment: Air Treatment & Ventilation (coming soon). Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Hurricane Ida: Still a Disruptive Force to the US Economy

Hurricane Ida has finally passed into memory after making landfall in Louisiana and soaking much of the Eastern US with heavy rainfall. However, the effects of the storm are still being felt across the US in a number of ways:

  • Gas prices: For many in the US, high gas prices were one way in which the effect of Hurricane Ida was evident: a significant number of refineries are located in Louisiana, all of which ceased operations in the wake of the storm. Prices for regular gasoline climbed as supplies fell and people in the path of the storm purchased fuel for their vehicles before temporarily evacuating.
  • Diesel fuel prices: While few Americans fuel up with diesel, the trucks that carry consumer goods across the US almost exclusively rely on it. Thus, refinery shutdowns due to Ida meant that diesel fuel production was curtailed as well. This caused diesel prices to reach new highs – costs which will almost invariably be passed on to the consumer. Shoppers – who have seen high prices due to various pandemic-related supply chain issues – thus saw further price increases as shippers were forced to pay more to fill their trucks’ fuel tanks.
  • Plastic resin costs: In addition to gasoline and diesel fuel, refineries also make the feedstocks used to make the plastics that, in turn, permeate nearly every corner of our lives. Thus, refinery shutdowns also affected resin supplies, with two plastic types – polyvinyl chloride (PVC) and polystyrene (PS) – most affected. PVC is used in a wide range of building materials (e.g., siding, doors, windows, wire and cable jacketing, low-slope roofing membranes); both PVC and PS are frequently used in packaging applications. Shortages of these resins thus would not only affect the housing market – at a time of elevated housing prices – but also impact the price of thousands of consumer products, from groceries to health and beauty products.
  • Building materials: Building materials were already in short supply across the US due to a surging housing market and strong consumer interest in home improvement projects. Now, with thousands of homes and businesses across the nation damaged by Hurricane Ida, consumers are now facing a shortage of building materials as contractors scramble to perform needed repairs. Furthermore, even if materials are available, the workers needed to install them are also in short supply, further delaying repair and renovation projects.

Freedonia analysts will continue to monitor the ongoing effects of Hurricane Ida – as well as other severe weather events – on the US economy.

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.

Climate Change & COVID: Pandemic Habits that Helped or Hurt the Planet

With the recent publication of the Sixth Assessment Report from the United Nations’ Intergovernmental Panel on Climate Change, conversations turned from pandemic to environmental impacts. However, the two are intertwined in many ways.

Because of the pandemic, people in many parts of the world made significant changes to how they live, work, play, and shop. Many consumers have also shifted their shopping priorities, whether temporarily or not. Businesses also changed how they operated. These shifts shows that major sudden changes in lifestyle and business practices are not only possible, but sometimes quite beneficial on many levels.

For instance, companies and governmental agencies thought carefully about which employees needed to be on-site and who could work remotely from home, which resulted in  fewer miles driven and reduced gas consumption in 2020.

However, disposable carryout containers and utensils proliferated as takeout dining increased. That, along with the temporary (in most, but not all places) shift to disposable retail bags, led to more petroleum-based single-use plastic packaging ending up in landfills, as many of these bags are not recyclable. While some coffee shops and grocers are bringing back their reusable cup and bag programs, it will take some time for consumers to return to their pre-pandemic habits with reusables.

Climate change remains front of mind. 2021 has so far brought major weather events including the Texas ice and deep freeze event in February, an expansive wildfire season and dangerous heat out west, and a challenging hurricane season that has so far included major flash flooding in the northeast. As people are uprooted by these events and forced into close living quarters with people from multiple households (whether multigenerational or in emergency centers), they can become coronavirus spreading events as well.

Freedonia analysts remain on watch for disruptive events as well as innovations that could provide solutions.

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.

  Consumer Goods      Industry Studies