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.

Declining Retail Sales Among Building Materials Distributors: A Time to Worry?

The recent release of the July retail sales report showed declines in retail sales for many segments of the economy, and the building materials and garden equipment and supplies segment was no different, posting a decline of almost 9.0% from the June retail sales report. While overall retail sales in the segment were still much higher than last year – a 16.4% increase over that of July 2020 – the steep fall in retail sales in the segment has people wondering if this portends a downturn in overall building construction activity.

However, it must be noted that there are a number of explanations for the decline, key among them:

  • the retreat in lumber prices from their record highs seen earlier in the year – a key share of sales for many building materials retailers and distributors
  • the elimination of many state-level unemployment benefits and stimulus packages – many consumers have less discretionary income and will be less likely to invest such items as home goods and lawn and garden consumables
  • shoppers’ concerns about contracting the Delta variant of the coronavirus – many consumers stayed home and ordered products online or opted to delay their purchases for the time being

Retail sales by building materials and garden equipment and suppliers are expected to remain at a much higher rate compared to last year, as the bullish housing market and high level of consumer interest in DIY projects will continue to propel sales of lumber and many other construction products. However, for the rest of the year, retail sales in the segment may continue to fall, as lumber prices continue to remain at more historically normal levels and the advent of winter weather will affect construction activity, especially in the northern half of the US.

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.


The US Lumber Market: A Return to Normalcy?

As readers of this site will note, the shortage lumber – and its high price when available – was a completely unanticipated (and unpleasant) result of the COVID-19 pandemic. For more than a year, consumers have had to contend with this double whammy, which has:

  • added to the purchase price of new homes  at a time when a lack of affordable housing was a major concern
  • delayed the construction of new homes, which were already in short supply before the pandemic hit
  • lengthened the time needed to complete home improvement projects, causing frustrations to both contractors and DIYers alike

However, a recent article indicates that the great lumber crisis that accompanied the pandemic may soon be coming to an end. First, nearly half of lumber dealers surveyed – after months of shortages – reported that they had excess lumber in stock, and nearly a third claimed that they had normal levels of inventory. Second, lumber prices have fallen dramatically, reaching about $500 per thousand board feet – a level just slightly above that of lumber prices prior to the pandemic.

This sudden turnaround in the US lumber market will be a boon to the US economy as it rebounds from the effects of the pandemic – provided lumber prices remain low and supplies remain high. A ready availability of less costly lumber could provide a further boost to new home construction (adding to a tight supply of available homes for purchase) while also encouraging homeowners considering large-scale renovations (such as the ever-popular kitchen and bathroom remodeling, or adding a home office) to undertake them. Not only will this continue to fuel demand for lumber and other building materials, but the economy will be further stimulated by the thousands employed in the construction trades, building and renovating homes.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly such studies as Lumber, as well other studies in the Construction and Building Products and Consumer Goods areas. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Continuing Demand for RVs Spurs Manufacturers to Expand Production

We have frequently mentioned on this site how the pandemic has increasingly sent Americans outdoors for their entertainment. Homeowners looking to get out of their homes – while meeting guidelines for minimizing the spread of COVID – have increased the amount of time spent outside. Consumers’ spending habits have reflected this, as demand for a wide range of outdoor products – such as pools, decks, playground equipment, and other items – have surged.

Among the products that have seen the largest increase in sales during the pandemic are recreational vehicles (RVs). This is not surprising, as these craft allow families and other groups of people to enjoy the outdoors while also providing a higher level of comfort than simple camping. Indeed, manufacturers of these vehicles – recognizing that many of these buyers are more affluent – have added amenities to their RVs, such as additional cabinetry, more extensive bathroom facilities, and more attractive interior components.

Demand for RVs has been so strong that Thor Industries – a leading RV producer – announced plans to build two new RV manufacturing sites in Michigan. These facilities, which will employ more than 400 people, will complement Thor’s existing network of production sites, and increasing the company’s RV manufacturing capacity.

Freedonia Group experts will continue to monitor the US RV market and see how manufacturers cope with the increasing demand for the craft as the US gradually emerges from the depths of the COVID-19 pandemic.

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


Home Classrooms: Another Pandemic-Related Home Innovation

Homeowners have added a number of spaces to their residences that would have seem completely superfluous prior to the COVID-19 pandemic: the home office, the home gym, the extra bedroom for family members moving in, even “cleaning stations” where those concerned about the virus can remove potentially contaminated garments and scrub their hands before entering the main residence. To these areas we can now add another space: the home classroom.

Many homeowners – noting that much as they need designated spaces for and exercise, so too do their children need their own areas for learning and schoolwork – have opted to create these spaces in their residences. Indeed, as school districts across the US wrestle with mask mandates and the safety of classroom instruction, and as interest in home-based learning rises, it is expected that increasing numbers of home builders and home owners will create these spaces to make homes more suitable for families.

This increase in interest in home classrooms is expected to boost demand for a wide range of building and construction materials, such as:

  • shelving, cabinetry, and home organization systems to store school supplies when not in use
  • furnishings, such as desks and chairs, to outfit these areas
  • drywall and lumber to create interior walls and other partitions to create separate areas for learning and instruction
  • paint, especially vibrant hues to create a more lively appearance

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.


Continuing Shortage of Shipping Containers Another Blow to Global Supply Chain

US consumers have been confronted with sharply rising prices for a wide range of products – most notably, groceries and gasoline – and in a number of cases, the cause is the “supply chain”. While something of a mystery to many, the supply chain is simply the processes needed to get goods to the stores where people shop. The supply chain includes:

  • trucks (and truckers) to carry items to and from manufacturing plants, warehouses, and retail stores
  • pallets to serve as stable platforms for boxes and other items during shipment
  • rail lines and train cars to carry cargo once it is unloaded from ships to distribution centers
  • ships to carry items made overseas to US harbors
  • shipping containers that transport bulk cargoes on ships to railheads

While there is currently a shortage of most of these items across the US, it is the lack of shipping containers that is currently most acute, causing delays in product shipments, shortages on the shelves, and prices of available goods to climb. This shortage of shipping containers has been caused by a number of factors, key among them:

  • a surplus of empty containers in many parts of the US, as there are not enough trucks and railcars to send them back to port facilities for overseas shipment
  • backups at US ports – many ships (loaded with containers) are unable to be unloaded and re-filled with shipping containers
  • shortages of workers at warehouses and lading docks to remove goods from containers at distribution facilities, which has reduced the turnaround of containers for shipment back to ports

Though shipping experts believe there is enough global capacity of shipping containers, there will continue to be a shortage of containers in the US until the many bottlenecks in domestic supply chains can be resolved. This, too, cannot be solved quickly enough, even as the US economy improves and workers return to their jobs – including those in the crucial logistics sector.

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, as well as Freedonia Focus titles such as Freight by Waterway: United States, Freight Services: United States, Freight by Rail: United States, and Freight by Truck: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.