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.

Missing Something From Your List For This Holiday This Season?

If you’re having a hard time finding a traditional item or that perfect gift for your holiday celebrations, there are a lot of potential reasons behind that.

We’re all familiar with supply chain challenges, whether it’s misplaced shipping containers, high-priced air freight, or not enough truckers to get the products to retail shelves or your door. By now, this isn’t news. In fact, many shopped early to be sure they could get orders in time. Still, mail has been slow (personally, I saw a delivery take 2 weeks to go from Philadelphia to Cleveland), but last mile delivery drivers can still be seen out making deliveries after 10 PM and even in the overnight hours.

High demand…that’s also not new, although the products involved have continued to shift. Many of us have had the same ideas for how to spend our pandemic period, from home baking to gardens and home pools to camping and hiking to outdoor socializing in backyards and event spaces, or buying chicken (alive for eggs or prepared for eating). So a lot of things are in short supply mainly because so many of us want them. We have to be flexible and willing to wait – and possibly pay high prices – for these in-demand items.

But what about hackers? Yes, cyberattacks have been disruptive this year. Well-known production disruptions due to hackers included

Freedonia analysts continue to track changes in supply chains and other challenges to production that create both roadblocks and opportunities for market participants and potential entrants.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Consumer Goods and Packaging industry catalogs. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Food & Beverage      Industrial Components    

Automation Spurred by the COVID-19 Pandemic: Investments in Meat Processing & Beyond

We first discussed the trend of pandemic-related increases in manufacturing automation in 2020. At the time, meat processing – an industry that has long considered automation inferior to human activity due to inexact cuts and too much waste – was only just considering it and looking into how they could make it happen.

However, machinery innovations through the use of artificial intelligence, sensors, and cameras are resulting in machinery that is both increasingly better performing and less expensive. To that point, recently Tyson Foods announced plans to invest $1.3 billion to automate parts of its production lines over the next three years.

The need to implement automation has been spurred by a variety of challenges:

  • worker protection – particularly the need to space workers out amid high infection rates
  • the need to continue operating when outbreaks occur
  • labor shortages as it becomes difficult to find sufficient staffing for all necessary shifts
  • high demand as restaurants reopened this year and consumer grocery spending remains at elevated levels

Tyson Foods stated that they expected automation will allow them to increase production volumes, produce more reliability, and reduce costs over time. The company expects to automate roles that are more difficult to do and where worker turnover is high.

This is a trend that continues to spread across a variety of other industries as well. For instance, Amazon has invested in robots to help fill orders in warehouses and smart machinery that makes right-sized custom boxes for each individual shipment.

The benefits of investments in automation in this era include:

  • hedging against hiring challenges, when not enough of the right kind of workers available
  • reducing the cost of production in a country or region with high labor rates to become more competitive with other areas as more manufacturers are diversifying their supply chains
  • increasing worker safety, not only in terms of keeping workers spaced out for pandemic productions, but also potentially reducing human involvement in tasks more prone to worker injury, whether repetitive or traumatic
  • improving efficiency as sensor-driven machinery can quickly make customize operations, including shipping container selections for fulfillment firms

Freedonia analysts continue to track the automation trend throughout our coverage areas, searching for key impacts and opportunities for growth.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Food Processing Machinery, Global Packaging Machinery, and Meat, Poultry & Seafood Packaging. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Commercial Construction Market Adapts to Post-COVID World

The daily commute and weekly (if not more often!) shopping trip has been replaced by the simple act of turning on the computer or reaching for the mobile phone. In consequence, employers, building owners, and municipalities are realizing that the US has an excess of commercial building space. The question now, of course, is to determine how to fill this space:

  • Some office complexes are being repurposed into warehouses (to house the increasing number of packages being shipped across the US) or apartments (to meet the need for residences, especially in urban and suburban areas).
  • Smaller retail spaces (such as restaurants and convenience stores) are being converted into “dark stores,” or mini-warehouses that facilitate the rapid delivery of groceries and other staples in urban centers.
  • Other developers are refurbishing office complexes by adding amenities (such as game rooms, nap rooms, and personal chefs) to entice both employers and employees back to the office.

The stakes are high for all involved:

  • Municipalities are concerned about the loss of tax revenues from employees working from home – not only depriving them of payroll taxes, but also sales taxes from the various purchases employees make when in the city.
  • Building owners must fill properties with tenants to remain profitable.
  • Firms must navigate the challenge of wanting people back in the office while also realizing that many workers feel they are equally, if not more, productive at home.
  • Construction firms concerned with a loss of business must reposition themselves from builders of new structures to specialists in remodeling existing properties.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


High Prices, Lack of Product Availability Affect Sales by Building Materials Retailers

The latest retail sales report by the US Census Bureau showed that retail sales by building materials and garden equipment and supplies retailers declined more than 2% in November. While retail sales for the year were up more than 13% compared to 2020, this fall in sales for the month was a matter of concern for many in the industry. The drop in retail sales could be attributed to a number of factors, key among them being:

  • rising lumber prices and continuing high prices for a wide range of building materials
  • shortages of Christmas trees (which are often purchased at garden supply centers and big box retailers) in some parts of the US
  • a slowdown in DIY activity by homeowners as autumn turned to winter – homeowners are less likely to undertake home improvement projects in inclement weather
  • the end of hurricane season, when lumber and other materials used to fix and repair structures are often purchased in the aftermath of storm landfalls
  • a retrenchment in consumer spending as the holiday season approaches – some consumers reduce discretionary spending in anticipation of an increase in spending in December

Looking forward, building materials and garden equipment and supplies retailers are anticipating an uptick in sales in December. Prices for lumber and other building materials are expected to remain high – as will new home construction, boosting sales of these products. Furthermore, December has traditionally been a time when people bought “big-ticket” items as gifts for themselves or others. Sales of these items – which include appliances, power tools, and lawn mowers – are expected to be good, as many consumers will continue to invest in their homes, such as by replacing older appliances or upgrading lawn and garden equipment to maintain the exterior appearance of their residences.

TFG analysts will continue to monitor retail sales – as well as numerous other indicators – to gauge their effects on the US economy going forward.

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.


Initiative to Remove Lead Service Pipes a Boon to Construction Industry

Some of the more searing images to hit the collective US conscience over the past few years have been the scenes of people in Flint, Michigan lining up to receive bottled water due to concerns about the safety of their city’s water supply. This process – caused by the realization that their network of lead pipes were decaying and thus contaminating local water supplies – called attention to a nationwide problem: thousands of localities across the US still have lead service pipes that carry potable water into homes and businesses. Efforts to remove these pipes have been stymied by the large numbers of pipe installed, the difficulty of the work (often requiring much excavation), and the cost of replacement pipe.

Recently, though, the US government announced a new initiative to replace all of nation’s lead pipes. This $15 billion initiative will enable the removal of pipe networks to the nearly 10 million residences in the US with lead pipes and their replacement with newer and safer materials. Work on these projects, which is scheduled to begin in 2022, will boost demand for a wide range of building materials, key among them:

  • pipe – depending on local building codes, these pipes can be made from plastics, precast concrete, galvanized steel, and clay
  • fittings, such as flanges, wyes, connectors, and other pipe system components
  • plumbing fittings, such as faucets and tips, that have also come into contact with lead-contaminated water
  • paving materials – in many cases, pipes lie underneath streets, driveways, and porches, requiring the replacement of concrete and asphalt

In addition to these materials, thousands of plumbers, pipefitters, and other trained construction personnel will be needed to complete these tasks. Furthermore, such equipment as excavators, bulldozers, jack hammers, augers, and other specialized products will be required for the work – a not unimportant consideration for suppliers of construction equipment. 

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.