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.

What Will It Take to Make Remote Workers OK With Returning to the Office?

Freedonia’s analyst, editorial, economist, custom research, and marketing teams assembled in person at the Cleveland, Ohio office this week along with new staff in business development and the content team from Simba Publishing, our sister published brand. We shared ideas, developed new plans, discussed the factors in play underlying changes in our economy, and shared how key trends impact activity across industries. Our space included open and spaced out meeting areas, open windows kept the air flowing, and we used technology to include those who were unable to join us in person.

What would it take to make workers comfortable in the office? Two factors jump out. Clean air and lower commuting costs:

  • Wellness factors have long ranked high for many workers. Is the facility clean? Are there hygiene measures in place? How is the air quality? These trends accelerated in the pandemic era as workers prioritized the use of air filtration, ventilation systems, humidifiers/dehumidifiers, and indoor plants as ways to keep workers healthy. More companies and commercial building owners upgraded their HVAC systems, often incorporating HEPA filtration or improved fresh air exchange capabilities.
  • Commuting costs have more recently become an issue. With gas prices rising to levels not seen in decades, workers wonder why they have to spend more money to get to work when they were able to do their work remotely without the cost and time of commuting. Some companies are organizing carpool groups among workers or hiring a company to provide free vanpooling for multiple workers from multiple central locations. Other companies are offering bonuses, sometimes in the form of gas cards, to workers who return to the office more often.

Either way, businesses will continue to use creative responses and investments in their workers to retain staff. The most successful businesses will make the measures they incorporate meaningful to their particular staffs. The health of the commercial real estate market and business districts around the world rely on getting this balance right.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Construction & Building Products group and the Consumer Goods markets, particularly Indoor Air Quality Equipment. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


FOMO & Buyer’s Remorse – Two Sides of the Housing Market

Is the market showing signs of a housing bubble? The Federal Reserve Bank of Dallas thinks it’s possible and warned this week that the market is showing “signs of a brewing US housing bubble.”

FOMO (fear of missing out) is a key factor causing concern. Buyers – both prospective owner-occupants and investors – are skipping inspections and coping with rapidly rising prices and bidding wars to make sure they aren’t left behind. As more prospective home buyers believe that prices will continue to rise even faster, they will be willing to make even more concessions to the seller out of concern that the prices will be even higher in a few months or years to come.

However, FOMO purchases that end up being rash decisions not only cause the market to overheat but lead to increased incidents of buyers’ remorse. If there is a market correction in the near future, that will be even more problematic for the home owners who are already seeing reasons to regret their purchase.

Some COVID-era buyers took money they had been spending on travel or on rent close to downtown offices and redirected to the purchase of a home, often with space for a home office, backyard entertaining, and away from city centers. However, as pandemic restrictions ease, some new homeowners regret not having that budget for travel. Others expected to be able to make renovations to improve a quickly bought home, but were surprised by the high cost and delays involved in everything from new floors to appliances and furniture.

This delayed ability to make a home the way a new homeowner would like it to be will contribute to extending the COVID-era home improvement boom. Still, the heat of the market is something to watch. Many economists agree that changes in lending practices since the 2008 recession will limit the impact if a bubble bursts. However, remodeling activity and trends in updating homes have long been a more important part of the construction industry and the willingness of homeowners to invest in their properties is crucial to the health of the market.

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


Wood You Believe It? Lumber Prices on the Rise Yet Again

The cost of lumber in the US reached its peak in mid-2021, as a misreading by lumberyards and homebuilders of the impact of COVID-19 on consumer behavior led to a shortage of lumber and prices triple those seen in early 2020. The situation was exacerbated by COVID-related supply chain issues and tariffs on softwood lumber imports from Canada. This greatly increased the cost of new home construction (around $36,000 per home, according to the National Association of Home Builders) and home renovation projects, which became especially popular among the vast amount of households stuck at home during the pandemic.

Lumber costs finally fell in the summer of 2021, as DIY-inclined homeowners grew fed up with sky-high lumber costs and postponed their renovation projects. While lumber costs remained well above pre-pandemic levels, there was some sentiment that the market had stabilized enough to avoid further short-term price spikes.

Well, that lasted a few months. In 2022, lumber prices are again shooting up, and as of February 17, are nearly three times the levels seen as recently as August 2021. This latest jump on the trampoline is caused by a variety of factors, such as:

  • the November decision by the US Commerce Department to double its tariffs on Canadian softwood lumber imports to nearly 18%, despite the inability of domestic sawmills to meet US demand
  • damage caused to Canadian forests by a plague of mountain pine beetles and a strong wildfire season
  • labor shortages for sawmills that contribute to output lagging new home demand
  • broader inflationary pressures impacting operating costs

Are there reasons to believe that lumber prices will regress in the near-term? A receding of the Omicron wave could help ease labor and supply chain issues. Additionally, the Commerce Department could ease its tariffs on Canadian softwood lumber imports (as it did in 2020), which run contrary to both President Biden’s trade policy criticisms while running for president and his administration’s affordable housing goals. Lumber demand, in the meantime, will remain high.

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.


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.