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.

Research on In-Vehicle Air Flow & Viral Transmission Could Change Car Design

The onset of the global COVID-19 pandemic spawned a wave of research and brought many issues to the forefront. Findings in the health sphere are among the most important, and will continue to fuel technological innovation for many years to come. The research being done today is fundamentally transforming our understanding of both viruses and their spread, and will leave us better prepared for future pandemics.

In the January 2021 issue of Science Advances, for instance, researchers from Brown and University of Massachusetts in the US published an article examining the spread of respiratory diseases in passenger cars. The researchers looked at “relative concentrations and residence times of a noninteracting, passive scalar—a proxy for infectious particles—being advected and diffused by turbulent airflows inside the cabin”. The goal of the research is to advance our understanding of how airflows in passenger cars impact virus spread, and reduce transmission risk. These findings have significant implications for many different aspects of passenger car design as well as related fields of research.

For manufacturers of cars, insights about airflows and the spread of viruses can lead to innovations in cabin design. In addition to reducing transmission risk, such modifications can also be used to improve air quality and increase comfort. Suppliers of filters for automotive applications will also benefit from a better understanding of cabin airflows, helping them to develop the next generation of filtration products. Such innovation is likely to also impact other consumer air filtration technologies.

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

  Automotive & Transport      Covid-19    

It’s Not a Game: Chip Shortages Stall Auto Industry Recovery

The global auto industry, like most manufacturing sectors, was hit hard in the early months of the pandemic in 2020, with plants closing and sales plummeting. However, sales picked up faster than expected, and as 2021 approached, the promise of new vaccines and global economic improvement provided hope that industry growth would accelerate.

However, auto producers worldwide are now having to slow or stop production again due to a shortage of computer chips, which could have a ripple effect throughout the automotive supply chain.

Motor vehicles are increasingly driven by electronics, but auto production is just one outlet for semiconductor chip producers, whose businesses are increasingly driven by consumer electronics and the dispersion of smart technology. As auto production dropped dramatically in early 2020, chip suppliers switched their focus to producing chips used in gaming systems, smart phones, laptops, and other products high in demand by consumers forced to stay at home. When auto producers ramped up output again, chipmakers began to have trouble meeting demand, creating a challenge that is expected to continue well into 2021.

Will a shortage of chips halt the global auto industry recovery? According to Thomas Bowne, Chief Economist at The Freedonia Group, the impact on total annual output expected for 2021 will likely be negligible. “The market allocation by price mechanism is a wonderful thing. The ‘shortage’ of chips will result in motor vehicle manufacturers perhaps having to spend more than they budgeted for motor vehicle production in the short term. But as global motor vehicle demand bounces back in 2021 and production increases accordingly, chip manufacturers, seeing a good opportunity for higher profits, will likely switch course to meet that rising demand in the motor vehicle segment.”

Healthy motor vehicle production is essential to the outlook for growth in many other industries worldwide, including those that produce components such as batteries and filters, as well as coatings, adhesives and even items like professional power tools used on manufacturing lines. Automotive applications account for a large share of demand for many of these products. For example, the industry accounts for over a third of all demand globally for both batteries and filters. 

For more information and a discussion of market opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research related to the auto industry, including Global Batteries, Global Filters, Paint & Coatings, Global Thermoplastic Elastomers, Global Polyolefin Elastomers, Global Adhesives & Sealants, and Power Tools (an update of Global Power Tools is coming soon). Freedonia Focus has also recently published Electronic Components: United States and an update of the Semiconductors: United States report is coming soon. Freedonia Custom Research is available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19      Machinery & Equipment    

Manufacturing Finishes a Bad Year on a Good Note

When the COVID-19 first struck in early 2020, there was an extreme and near immediate negative impact on the global manufacturing sector. Uncertainty on how best to navigate this new reality, and on how long the world would be in the grasp of the pandemic, resulted in the temporary closure of nonessential businesses and a slowdown in general business investment. By April 2020, the PMI – a measure of economic trends in the manufacturing and service industries – reached its lowest point in a decade.

However, the world started to get back on its feet a few months later and steady gains in manufacturing activity through the second half of the year culminated in a December measurement that, in many countries, was the highest mark in years. Through most of 2020, the global manufacturing sector has shown that it was able to withstand many of the disruptions caused by the pandemic, though it was not a smooth journey:

  • The service industry has not recovered to nearly the same extent as manufacturing. Travel in particular – both business and personal – is still struggling, which has continued to hurt airlines, hotels, and restaurants, as well as industries that supply them.
  • Even within the manufacturing sector, the size of the recovery has varied considerably. In December, for instance, the Printing and Nonmetallic Minerals Products industries in the US contracted. Consumer goods producers also registered a weak December as consumer spending slowed.
  • Although it did show a recovery from the sharp drop in manufacturing activity early in 2020, the manufacturing sector in Japan continued to register contractions through nearly all of 2020 before flattening in December.
  • Input prices have risen sharply in some industries as supply chains evolved, production was shut down or limited by physical distancing, and demand changed.

One of the bigger issues early on in the pandemic was the disruption of supply chains as countries enacted different measures to combat the spread of the virus at different times. While there remain sporadic supply chain issues, the US has generally reported that there is stability among inventory levels and that supply chains are satisfying at least short-term demand requirements in many industries.

However, this improvement could still be upset by a resurgence in coronavirus cases if the rollout of the COVID-19 vaccine falters, upsetting normal supply chains and the ability of manufacturing facilities to operate at full capacity. In the second half of 2021, however, many of these challenges to manufacturing could be resolved if much of the world has the chance to be vaccinated and restrictions to movement and operations are lifted.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Material Handling Equipment, Global Packaging Machinery, and Global E-Commerce Packaging. Related reports from Freedonia Focus include coverage of various US manufacturing and service industries, such as Fabricated Metal Products, Steel Mill Products, Audio & Video Equipment, and Employment Services. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Construction & Building Products      Consumer Goods      Covid-19      Food & Beverage      Industrial Components      Machinery & Equipment      Packaging    

US Bus Operators Struggle With Pandemic-Related Operational Restrictions & Reduced Traveling; Federal Bailouts Requested but Pending

The American Bus Association (ABA), which represents US motor coach operators, private school bus operators, and other industry participants, began to raise concerns about the viability of the US motor coach industry as early as May 2020. The ABA asked the Trump administration to include the motor coach industry in the COVID-19 aid package, arguing it was an essential pillar of the US transportation sector.

In mid-2020, Senators Susan Collins and Jack Reed – with the support of the ABA – introduced a bill that would provide a $10 billion aid package as well as $5 billion in loans to bus operators and passenger boat transportation companies. The Coronavirus Economic Relief for Transportation Services bill is based on the airline bailout, and a similar bill was introduced in the House of Representatives.

The ABA argues that without this bill, up to 40% of private bus companies could go out of business by the end of 2020 because of the dramatic drop in demand for their services related to the COVID-19 pandemic. It estimates that 308,000 employees in the industry have been furloughed in 2020. Turmoil in the industry will also have a major impact on domestic bus manufacturers, causing them to lay off workers, adjust supply chains, and delay investments.

The drop in tourism activity, restrictions on the movement of people, and closures of schools and businesses have had a profound impact on the use of private motor coach and school bus services. According to some estimates, the motor coach industry is expected to record revenues of about $4 billion in 2020, compared to the $15 billion it typically makes per year. Money from the bailout package could be used to buy new buses, fix existing models, and service debts.

As of yet, the CERTS bill has not been adopted and the ABA continues to push for movement on the bill. Currently, there is significant bipartisan debate among US lawmakers, and passage seems more likely with the re-election. Both motor coach and school bus operators are essential for the transportation systems of many US cities, and this will put pressure on the government to offer an aid package.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Buses, Global Diesel Engines, Recreational Vehicles, and Travel Services: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19    

Pandemic Boosts Individual Transportation Options Over Public Transit

With reports coming out about high infection rates among transit workers and with broad community spread of the coronavirus, in general, many people are seeking individual transportation options over public transit.

Some of those options have included new or used cars. September retail sales from dealers of motor vehicles and related parts were up over September 2019 figures, although the 9 month sales so far in 2020 are still below where they were at this time of year in 2019.

Others have sought out e-bikes and other lower cost individual transit options suitable for urban use. E-bikes have also benefited from consumer interest in outdoor recreation as some have purchased versions designed for mountain biking or distance cycling. The rising availability of more types of e-bikes coupled with regulations that make them more accessible will also support sales.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Motor Vehicle Outlook 2020, Global E-Bikes, Global Motorcycles, Global Diesel Engines, Global Buses, and Global Electric Motors. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19