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.

Summer is Coming…Vacci-cation, Anyone?

Through the coronavirus pandemic, many workers with paid time off benefits chose to hoard their time off: waiting for economic or job stability…waiting for events to resume…waiting for resorts to reopen…waiting for international travel to open up or become easier…waiting for enough of a sense of safety to explore and gather.

2020 was a time of backyard staycations. Homeowners installed pools, patios, fire pits, outdoor movie screens, and outdoor kitchens. They nurtured gardens and bought comfy furniture and portable heaters. They made their yards a place to gather safely and entertain the kids as summer camps and sports leagues were restricted or closed.

Now that more people are getting vaccinated and restrictions on traveling and gathering are loosening, what kind of summer can we expect for 2021?

  • PTO will be used. People are feeling more confident and those who have PTO benefits will enjoy at least some of it this year with extended weekend holidays and longer trips.
  • We won’t fully unplug. Remote work will enable some to relocate for longer periods to combine work and play in a vacation setting.
  • Staycations will stay. Those who couldn’t get a pool or other sought-after summer item in 2020 will likely have better luck finding it this year. Additionally, while most children are still not yet able to be vaccinated, many families remain reluctant to travel or reengage in sports leagues or other camps
  • Gardens are back. Some pandemic habits will remain as spring spending at lawn and garden retailers indicate many are planning to keep their gardens going or start new ones in 2021.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Consumer Goods areas, including Outdoor Furniture & Grills; Freedonia Focus Reports such as Amusement Parks: United States and Travel Services: United States; and Packaged Facts reports such as Home Food Gardening: US Market Trends & Opportunities and Food Carryout & Delivery. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Consumer Goods      Covid-19      Services    

Strong Pallet Market Buffeted by Supply Chain Crises

The recent blockage – albeit temporary – of the Suez Canal demonstrated how tenuous the global supply can be, threating shipments of thousands of items worldwide. However, another item is as critical to the global economy as a giant freighter – and equally in peril: the humble pallet. Demand for pallets has risen over the past year as shipments of construction materials and numerous industrial products have remained strong, even during the COVID-19 pandemic. Furthermore, as more and more consumers shop from home, pallets are in demand to handle the vast number of packages shipped to and from warehouses and distribution centers.

However, as a recent article demonstrates, the swelling market for pallets is threatened by a series of challenges:

  • Surging lumber prices and a shortage of available lumber stock have made it difficult for wood pallet manufacturers to obtain the main raw material for their products.
  • Increasing nail prices – more than 100 can be used to assemble each pallet – have further driven up pallet costs.
  • Labor shortages – from workers needed to assemble pallets to the truckers needed to transport them to manufacturers and shippers – have producers scrambling to find employees to assemble and repair pallets and deliver them to customers.

While wood pallets will remain the leading pallet material going forward, rising costs and a lack of supply may encourages to use plastic pallets. Though more expensive, pallets made from plastic offer end users a number of advantages, such as lighter weight and the ability to be used for many trips before requiring repair or replacement. More importantly for suppliers, plastic pallets are more readily available than those made from wood.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Pallets and Global Pallets. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19      Industrial Components    

Boosted by Pandemic-Era Trends, Germany Registers Record Breaking E-Bike Sales in 2020; An Opening for the US Market Too?

The highly competitive German e-bike market – the second largest worldwide behind China – turned in a record breaking performance in 2020. Despite the severe economic impact of the COVID-19 pandemic, the Zweirad-Industrie-Verband (ZIV) reports that sales of e-bikes grew 43% in 2020 to reach 2.0 million units.

The 2020 performance represents an acceleration of a trend that has been occurring for a decade: German riders of conventional bicycles and some internal combustion engine scooters and mopeds are moving to e-bikes. Consumers are attracted by the superior performance and greater convenience compared to bicycles, as well as the fact that e-bikes cost less than mopeds and scooters. Over time, the performance gap between e-bikes and mopeds and scooters has also shrunk as high-end and specialty e-bikes developed for Germany.

The COVID-19 pandemic led to the implementation of restrictions on both businesses and people. Use of public transportation decreased sharply and other modes of transport were also became less appealing (e.g., ride-sharing, taxis). In addition, consumers increasingly looked for new forms of recreation following the closures of many bars, restaurants, clubs, and similar businesses.

The 2020 spike in e-bike sales will have a long-term impact on the German market because many new e-bikes users are likely to continue to participate in the activity for many years. E-bikes in particular are well suited for older riders because of their light weight and ease of use. German consumers generally prefer high-performance models and, as consumer awareness grows, technological innovation will accelerate.

Some of these same trends have held true in the US market, presenting opportunities here as well. For instance, 38% of respondents to The Freedonia Group National Online Consumer Survey (conducted February – March 2021) noted that they were using public transportation less because of the coronavirus pandemic and 31% noted that they were using taxi and ride-share services less because of the pandemic. Though some of these reductions may have been due to reductions in overall travel and commute time, such trends present an opening for other types of transportation to take root, particularly low-cost options for shorter trips.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly Global E-Bikes, Global Motorcycles, and Global Motorcycle Lubricants. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Consumer Goods      Covid-19    

Biden Administration to Investigate Global Supply Chain Issues

On February 24, US President Joe Biden signed an executive order mandating that federal agencies conduct a 100-day review of critically important supply chains, as the COVID-19 pandemic has raised focus on issues regarding access to certain products and materials generally sourced from abroad (and particularly those from China).  The review will focus specifically on four items, some of which have faced supply chain problems even before the pandemic:

  • Semiconductors:  Access to these chips, which are used for multiple purposes in motor vehicles and also are essential components of iPhones, personal computers, smart TVs, gaming systems, and more, increasingly became a problem during the pandemic. As remote working became more commonplace, demand for these chips increased greatly to accommodate the need for more personal computers and laptops. Additionally, trade restrictions placed on imports from China also caused difficulties, as many of China’s leading chip manufacturers had export restrictions placed on them by the United States. Additionally, some of these companies claim plans to expand manufacturing to the United States have been hindered by national security concerns raised by the Committee on Foreign Investment in the United States (CFIUS), due in part to the possible military applications of these products. The US-based Semiconductor Industry Association claims that the US’s share of global semiconductor manufacturing has fallen from 37% in 1990 to 12% today, and US manufacturers are pushing the White House to work with Congress to provide investment that they claim will support research and design operations and to increase domestic semiconductor production.
  • Pharmaceuticals: Shortages in certain drugs during the pandemic has also prompted a deeper examination into the pharmaceutical supply chain. A combination of increased demand for drugs to address the rising number of hospitalizations and the shutdown or slowdown of some international shipping ports led to key shortages. There are also concerns about being too reliant on China for key pharmaceutical ingredients, which has doubled over the last decade
  • Electric vehicle batteries: Global manufacturing of electric vehicle batteries is currently heavily concentrated in China, with Japan and South Korea ranking numbers two and three leading manufacturers, and the US back at number six, according to a report from S&P Global. With major US automobile manufacturers increasingly focusing on electric vehicles – including General Motors, which has announced that it intends to phase out all gas-powered vehicles by 2035 – reliable access to these batteries will be crucial in the coming years. 
  • Critical minerals: Rare earth minerals are used in a wide variety of applications, including airplanes, steel, light bulbs, wind turbines, and many more. Supply chain issues for these minerals long predate the COVID-19 pandemic, as China is the leading global producer of rare earth minerals. This problem of production being so heavily concentrated in a single country has been intensified by some of the Chinese government’s behavior in the past, including a brief restriction of rare earth exports to Japan in 2010 in response to a dispute in the East China Seas. These concerns have led to increased efforts from the rest of the world to ramp up rare earth mineral production, which has lowered China’s share over the last decade from around 98% down to 63%. In a continuation of efforts from the Obama and Trump administrations, Biden’s executive order will examine means of addressing weaknesses in the rare earth minerals supply chain. This will likely include both strengthening the US rare earth mineral industry and transitioning reliance on imports to countries with whom the US has friendlier reliance – primarily meaning a transition away from China.

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.

  Automotive & Transport      Construction & Building Products      Consumer Goods      Covid-19      Energy & Petroleum      Food & Beverage      Industrial Components      Machinery & Equipment      Metals      Packaging      Plastics & Other Polymers      Tariffs      Textiles & Nonwovens    

Challenges Await to Biden Administration’s Made-in-America Push

The Biden administration has expanded on the “Buy American” trend pushed by the Trump Administration by signing the “Made in America” executive order, which, among other things, called for:

  • increasing the cost saving threshold required for federal contracts to purchase from non-US suppliers
  • stricter enforcement of existing Buy American policies, including closing loopholes that allowed companies to offshore manufacturing while continue to qualify for domestic preferences, for example by having 51% of a product’s materials sourced domestically

The goal of these policies is to ensure that taxpayer-funded federal spending is used to invest in domestic manufacturing, create US jobs, and strengthen national security. However, these policies are likely to face challenges – particularly in the short term – such as:

The impact of the Made in Executive order has the potential to become far more substantial should the Biden administration be able to sign into law vast infrastructure and/or energy bills, which would vastly increase the amount of federal spending impacted by the new regulations.

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.