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.

Sanctions, War, & Indirect Effects

So you think your business won’t be impacted by the fighting in Ukraine and accompanying sanctions on Russia? Maybe…

But do any of these statements sound familiar?

“I don’t source my wheat from Russia.”

Other companies do and substitutes for Ukrainian and Russian wheat have to come from somewhere.

Global food processors that typically source from Ukraine and Russia might approach US farmers and processors to get what they need. Result: rising prices for wheat worldwide.

“We’ll transition to electric vehicles as a way around Russian oil and rising gas prices.”

That might a good long-term strategy to become less dependent on oil in general, and many companies are making moves in that direction with stated goals to convert their fleet.

But that won’t necessarily help if you’re in Europe, where your electricity might still be generated by Russian natural gas.

It also might not be much near term help if you can’t get access to a hybrid or electric vehicle to replace your conventional gas-powered vehicle. Semiconductor chip shortages and supply challenges in accessing parts of all stripes are still leaving car dealers and medium- and heavy-duty vehicle vendors with reduced inventory and potentially long wait times.

“I source from Eastern Asia & the EU, not Russia.”

Closures of ports and changes in air space regulations and allowances might slow the international flow of goods, even if they don’t actually come from Russia. Russia is a very large country, so any shipping routes (air, land, or sea) that need to go around Russia or its ports could take longer and require more fuel. Result: potentially more time to ship and rising shipping costs in an era already challenged by high shipping costs and long lead times.

Freedonia analysts will continue to watch changes in sanctions and economic losses (crops, industrial and transportation infrastructure, worker productivity) as well as both the direct and indirect effects leading to price changes or opportunities to supply goods and services into new markets.

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.


Cummins & Meritor: Sustainability & Expected Growth of Electric Heavy Trucks Drives Acquisition

This week, the major engine manufacturer Cummins announced it will be acquiring Meritor, a leading supplier of vehicle parts. Executives say expected growth in electric heavy vehicles and the need to lead in this area was the key to this purchase.

The two companies are doing complementary research and development. Cummins is developing electric power trains, and Meritor is developing components for electric trucks, such as axels which have integrated electric motors.

Since it is often less expensive and easier to acquire needed technology than to undergo in house R&D or purchase the technology from a third supplier, expect to see more acquisitions relating to sustainable technologies, particularly among companies with complementary pursuits.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including the update of Global Hybrid & Electric Vehicles which is in progress now and Global Medium- & Heavy-Duty Trucks & Buses and Medium- & Heavy-Duty Trucks & Buses: United States from Freedonia Focus. Freedonia Custom Research is also available for questions requiring tailored market intelligence


What Freedonia Analysts Are Chatting About…

Freedonia analysts participate in a group chat where they share news, notes, and commentary of general interest... or things that entertain us. Sometimes, we are just sharing links. Other times, the links spark conversation. Below are excerpts from a few of those recent conversations:

“This has been a store-within-a-store extension recently... they are going more the way of Tractor Supply with this (pet & home supplies in one place) concentrating more on the home/decor/consumer angle and leaving more of the contractor/professional side to Home Depot. You can see that in the look/style of the stores too.”

“Tractor Supply is big in our area and we get a ton of ads for their pet products.

“Another recent store-within-a-store example is Sephora in Kohl’s.”

“Interesting! But stores have to be careful not to get too cluttered.”

“What happens when there is a store-within-a-store-within-a-store?... META

“Who will pay for it?”

“I think the technology started in the electric/hybrid bus industry. There was a lot of innovative charging technologies being developed for transit buses over the last 5 years or so. A few years ago, scientists in the Netherlands also had an idea of incorporating light and screens into the road to broadcast warnings to motorists that are driving. Interesting that people are rethinking something as simple as the road.”

“They have those electric roadways that charge EVs in Sweden. It seems much more feasible in a country that small.”

“Does it matter that Sweden’s roads are colder? Would a desert area be able to use them?”

“Trivia: roads in Las Vegas can reach 160 degrees”

“Hahaha ‘energy crisis’… wait, my cup is empty now too – more coffee!”

“Might hurry along the BYOC trend again... sell the beverage, not the cup!”

“I think some people are still squeamish about handling others' stuff (maybe especially something like a cup)”

They had a process for it pre-pandemic... I'm sure they can do it again.”

Starbucks has had its reusable cup discount back in place since June. ‘Starbucks held extensive trials and has adopted this new process, using a ceramic mug to transport the reusable cup through the bar, in EMEA and Asia Pacific to reintroduce reusable cups with confidence. Only clean cups will be accepted.’”

“Is the trucker protest in Canada going to cause a lot of trouble as the shipping containers parked out at sea?  I know that it's not nearly as expansive an event as the ships, but…”

“The bridge carries 30% of all truck trade between the US and Canada, so I think there will be pushes from both sides to cut this as short as possible.”

“See this? ‘New Zealand police arrest Covid protesters as 'freedom convoys' spread’ Some countries are already cracking down.”

“It may, if it persists or spreads. They are rerouting trucks north to a different bridge, but there is a 17 mile backup at this point.”

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.


Russian Aggression Toward Ukraine Threatens Metal Supply Chain Issues

As Russia continues to amass troops near its border with Ukraine, the rest of the world waits to see if there will be aggression or a step back. NATO powers have been united in their condemnation of the aggression (though not in the level of material support) and vow to implement crushing sanctions if Russia does follow through with the invasion. 

The economic impact of a renewed war between Russia and Ukraine would be profound, impacting everything from commodity prices and a global supply chain already fraught with issues. The manufacturing sector, for instance, could face serious repercussions from the conflict and “mother of all sanctions” that the US has promised would follow given Russia’s position as a prominent exporter of metals

As Russia is the leading global exporter of nickel and palladium (and is also a major supplier of aluminum, platinum, steel, and copper), these sanctions would have broad effects on a number of industries:

  • automobile production, as palladium is a key component of catalytic converters, copper is used in radiators and electric vehicle production, and aluminum is used in engines
  • electronics, as nickel, aluminum, and copper are used in medical equipment, power generation, mobile phones, kitchenware, and other consumer electronics, which have been in especially high demand following the pandemic
  • industrial equipment manufacturing, which uses platinum
  • others that are extensive users of aluminum, such as can and airplane manufacturers

This is not to mention the supply chain issues that would arise from price spikes related to energy and food, which would also follow an invasion of Ukraine. While NATO has refused Russia’s demand to stop expansion into Eastern countries, it is important to remember that it is not yet a certainty that there will be conflict. 

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Industrial Components, Machinery & Equipment, Automotive & Transport, and Construction & Building Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Plan for National Network of EV Stations Shows Increasing Role of Electric Vehicles

The US government recently announced a $5 billion spending plan to construct a national network of charging stations for electric vehicles (EVs). The plan, which will call for the building of these stations mainly along the nation’s interstate highway network, is expected to create an infrastructure of charging stations that will allow people with electric vehicles to more easily cross the US.

Details of the plan include:

  • Stations will be erected no more than 50 miles apart – making it easier for drivers to plan when and where they can recharge.
  • Stations must be located no more than one mile from a highway, ensuring that drivers can easily find these stations.
  • Each station will have at least four fast-charging ports, which will allow for multiple drivers to quickly charge their vehicles – akin to visiting a gas station.

This plan reflects the increasing popularity and sales of EVs. While Tesla is the company that currently leads in the production of EVs, numerous manufacturers are working to get more of these vehicles – both passenger cars and larger trucks – on the road, as evidenced by the high number of orders for Ford’s electric pickup trucks. These EVs will be fighting for spots at this new network of charging stations.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly titles such as Global Batteries and Global Hybrid & Electric Vehicles. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Consumer Goods      Energy & Petroleum