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.

Drought & Water System Allocations: More Cuts Ahead

Some of us have followed stories of boats, bodies, and other things that have been found as Lake Mead and other western lakes and rivers fall to historic low levels amid a long-running drought in the Colorado River Basin.  

Current projections show that Lake Mead’s water level will fall below 1,050 above sea level by January, triggering a Tier 2 shortage and dramatic cuts to water allocations. Especially hard hit will be Arizona, which faces cuts equivalent to 21% of the state’s annual allotment from the Colorado River.

States and municipalities have made uneven changes in water use regulations throughout the Colorado River Basin. Below is a brief discussion of what sorts of measures are needed, either more broadly or as a starting point where not yet implemented. Opportunities exist in the innovations and adaptations that make water use reductions measures such as these possible:

  • reductions in or the elimination of thirsty decorative landscaping like conventional lawns and non-native plants, in favor of hardscaping and drought-resistant native plants
  • appliances that reduce water requirements or make use of gray water in non-potable applications
  • plumbing that more efficiently disperses less water to a similar effect and upgrades that guard against leakage and unnecessary water loss
  • smart agriculture that plans crop placement and soil treatment to minimize water needs, along with more efficient irrigation and switching to less water-intensive farming either by changes in process or in types of crops planted
  • water treatment processes including advanced membrane separation processes that recycle waste water back into water basins, whether for non-potable or potable use or both, and make lower quality water sources available for use

Freedonia analysts continue to watch factors such as drought conditions, water treatment technologies, agriculture and landscaping innovations, and climate change trends.

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

  Custom Research      Industry Studies    

… And Not Enough: Products Can’t Be Produced If Even One Ingredient or Component is Missing

A lot has been made recently of the supply chain challenges and rapidly shifting demand trends messing with ordering as suppliers and retailers hope have enough, but not too much on hand. Well, in some cases, the outcome ended up being…not enough.

Companies across the economy are finding that they have to limit production in key areas, discontinue brand lines, or close factories either temporarily or permanently. A key example from the last few years has been automobile production facilities idled or with stocks of mostly completed cars on their lot which they can’t ship until they receive that missing part or component. Suppliers can’t sell a product if one ingredient, part, or component is missing:

Sometimes, suppliers can find a new source for that missing part or can find an alternative and keep things moving. But sometimes, they can’t. Here are a few recent examples:

  • Pregis announced it would be closing a Kentucky-based plant that made polypropylene sheet foam and eliminate that Microfoam brand product for lack of a key ingredient when no suitable alternative could be found. Microfoam sheets were primarily used for protective packaging applications.
  • Packaged food companies – including giants like General Mills, Hostess, Conagra, Beyond Meat, and Mondelez – have been feeling the pressure from supply chain challenges, especially for cooking oils (particularly sunflower oil) and wheat. These companies have reported difficulties in reaching production targets and fulfilling orders. In some cases, other ingredient options exist, but in other cases, the key ingredients must be rationed among the best selling or most profitable items and new releases are delayed.
  • Lack of replacement parts needed to maintain aircraft at keeping planes grounded. Lack of pilots, flight crew, maintenance staff, baggage handlers and more aren’t the only problems airlines are dealing with to keep flights running and on time.  

Freedonia analysts continue to watch factors such as stock levels, shifts in consumer demands, evolutions in supply chains, and inflationary trends for direct and indirect effects throughout the economy.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in Construction & Building Products, Consumer Goods markets, and Automotive & Transport industries, as well as Food & Beverage coverage from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Food & Beverage    

Too Much…: Overstocks Challenge the Economy

A lot has been made recently of the supply chain challenges and rapidly shifting demand trends messing with ordering as suppliers and retailers hope to have enough, but not too much, on hand. In some cases, too much is exactly what happened.

Some retailers found that the long-awaited grills, camping equipment, bicycles, home office chairs, small specialty cooking appliances, portable pools, and other items that were red-hot in the early days of the pandemic finally arrived from that literal slow boat from China (and after being stuck in offloading lines at ports) just in time for consumer demand to shift to restaurants, travel, and other “post-pandemic” dreams. 

Even if suppliers and retailers could see the shift in consumer demand coming, would it have been fast enough to change these earlier orders? Not likely.

But what to do with stocks that are now not the must-have items:

  • Warehouse for next season. However, warehouse space is at a premium right now and costs of goods being delivered are high given still elevated shipping prices. Will it be worth it to store the products?
  • Sell it at a discount now. In an inflation-era, deals still abound. But do consumers want or still need it, regardless of the price? And what do these discounts do to consumer pricing expectations going forward?
  • Let liquidation companies take it on. This lets suppliers and retailers take some guaranteed money now, cutting their losses at a defined point rather than potentially extended time line where costs could keep rising. It also helps protect against consumers coming to expect deep discounts on a routine basis for brands that would likely prefer to keep some premium perceptions among consumers.

Freedonia analysts continue to watch factors such as stock levels, shifts in consumer demands, evolutions in supply chains, and inflationary trends for direct and indirect effects throughout the economy.

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

  Consumer Goods      Custom Research      Packaging