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.

Design Your Way Out of a Shortage?

In many cases, a change in product design or how a product is used is not a near-term solution to a shortage. However, manufacturers that can’t get the materials they need and believe this is more than a short-term challenge for the next few months are looking for longer term solutions.

This increasingly includes making changes to their product in terms of what materials are used to make it, how it is packaged, how it is shipped, and if there are reasonable alternatives to the product altogether.

For instance, a global sand shortage has challenged many industries. We’re not talking about sand for your kid’s sandbox. This is sand for reinforcing beaches and shorelines hammered by storms, and sand used to manufacture concrete and glass (the former used in buildings, roads, and bridges and the latter in buildings, electronics, insulation, packaging, and more).

Industries are looking for ways around this challenge. Examples of such efforts include:

  • repurpose ground down plastic waste, old car tires, or glass waste as a substitute for some of the sand used to produce concrete
  • change construction design to require less concrete
  • build less of some of the things that are made with concrete (e.g., driveways and sidewalks) or use an alternative material (e.g., aggregate, stone pavers, or more sustainable pavers made with waste materials)
  • develop a sustainability certification for sand mining

Creatively considering options, including those which had previously been too expensive to be practical, will allow all industries facing material shortages or longer term supply chain challenges to think beyond the current crisis and stay ahead of the competition.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Flat Glass, Global Cement & Concrete Additives, Global Construction Aggregates, and Landscaping Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Latest Retail Sales Report Indicates Continuing Strength of Construction Market, Despite Dip From May Sales

The most recent retail sales report for June 2021 revealed another month of strong sales for building materials and garden equipment and supplies distributors. While on a month-to-month basis retail sales in the category posted a modest decline from May, compared to last year at this time, sales of building materials and garden equipment and supplies were up more than 18%.

A number of factors supported sales of building materials and related products in June 2020, key among them:

  • continuing high levels of new home building activity
  • strong homeowner interest in home improvement projects
  • a retreat in lumber prices that encouraged those who had postponed projects due to the high cost of lumber to undertake them once again
  • favorable weather conditions that encouraged homeowners to work in their yards, which boosts sales of garden products, or engage in outdoor activities – promoting sales of such items as swimming pools and toys and games

Summer is traditionally a strong season for building materials and garden equipment and supplies retailers, and it is anticipated that sales in this market segment will remain robust going forward. Indeed, the prospect of continuing declines in lumber prices and increasing consumer confidence is expected to spur retail sales in this segment for the rest of the year. Freedonia experts will continue to monitor retail sales in this category  – and others – to see how this affects the US economy as a whole.

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.


Revised Sales Figures Show Continuing Strength of US Kitchen & Bathroom Remodeling Market

The US home improvement market continues to be a source of strength for the US economy, as consumers remain interested in remodeling and adding on to their homes. A recent update by the National Kitchen & Bath Association demonstrates the strength of this, showing that spending on new kitchens and bathrooms is projected to rise more than 20% in 2021 – a substantial increase from its previously published figures.

In the new residential market, spending will be driven by strong new housing activity, as home builders capitalize on high demand for single-family by erecting new residences as fast as they can – despite high prices for building materials and shortages of lumber and other key products. Many of these newly built homes will feature large kitchens and multiple bathrooms (including master bathroom suites) to entice buyers.

In the much larger residential remodeling segment, many homeowners will seek to purge the memories of the COVID-19 pandemic by completely changing the residences in which they spent so much time over the past year. Kitchen and bathroom remodeling projects will be among the work most often specified by homeowners as they modernize the look of their homes or add features to enhance comfort and convenience – such as more and larger bathrooms with his-and-her sinks, senior-friendly toilets and bathtubs, and touchless fittings, or kitchens with more space for meal preparation and to store the new kitchen appliances that saw intensive use during the past year.

This surge in kitchen and bathroom activity will drive demand for a wide range of products, including:

  • cabinets
  • countertops
  • appliances
  • plumbing fixtures (sinks, toilets, and bathtubs and showers)
  • plumbing fittings (faucets, showerheads, flush valves)
  • pipe, valves, and fittings
  • hard surface flooring (especially decorative tile and luxury vinyl tile, or LVT)
  • paint, drywall, and other interior finishing materials

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly such studies as Home Kitchen & Bathroom Remodeling, as well other studies in the Construction and Building Products and Consumer Goods areas. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Construction & Building Products      Consumer Goods      Covid-19    

An Unexpected Development in Multifamily Housing: Larger Apartments

Something we have frequently chronicled on this blog is the strong demand for new housing across the US. While this has fueled the construction of single-family housing, the fact remains that the shortage of available – and affordable – housing has in turn led to calls for an increase in the construction of multifamily housing units (e.g., apartments and condominiums). Apartments and condominiums do have some advantages over single-family homes, key among them affordability – rent is often less costly than a mortgage payment in many markets – and the generally larger number of living units that can be included in a multifamily housing complex.

Thus, a recent article describing increasing construction of larger apartments shows that the COVID-19 pandemic is affecting this segment of the housing market as much as it is single-family housing. For many renters, larger apartments are a necessity. With hybrid work arrangements increasing becoming common, tenants need designated spaces for home offices – no matter how cozy they may seem. Furthermore, with many people adjusting their lifestyles in the pandemic – and remaining in their apartments more – even modest increases in living space can be seen as an attractive feature to potential tenants.

However, this trend of larger-sized apartments does have some potential downsides:

  • Increases in the size of an apartment means that fewer units will be constructed, at a time when more residences of every type are needed in the US.
  • Similarly, larger-sized will generally command higher rents, potentially pricing out lower-income tenants and those who suffered financial reverses during the COVID-19 pandemic.
  • The mix of building materials needed to construct these larger apartments will also change – more drywall and interior supports will be needed to create these additional rooms, while more flooring, paint, and interior molding will needed to finish these units.

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 and Consumer Goods areas. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Construction & Building Products      Consumer Goods      Covid-19    

Surging Demand Spurs Construction of New OSB Mill

While there’s been a lot of talk about the nationwide shortage of lumber – which has caused prices to rise and led to delays at numerous construction sites across the US – that is not the only construction material that’s in short supply. Construction professionals across the country face supply issues with a number of other construction materials, too, among them oriented strand board, or OSB. OSB is an engineered wood product used in a wide range of construction applications, key among them:

  • roof, floor and wall trusses
  • siding
  • wall sheathing
  • sub- and finish flooring
  • pack

Demand for OSB has been elevated over the past year due to high levels of new housing construction (where OSB is used extensively) and homeowner interest in home remodeling, which has boosted used of the material as homeowners add bathrooms, expand kitchens, and convent old spaces into home gyms and offices.

Thus, the announcement by Huber Engineered Woods – a leading OSB supplier – that it would be erecting a new OSB plant was welcome news to the construction industry. The new site will take advantage of its proximity to the extensive forest stocks in the Upper Midwest to obtain raw materials for OSB that can be used in construction projects across the region and in the US as a whole. While the facility is not expected to begin operations until 2024, demand for new housing and home improvement projects is anticipated to remain strong going forward.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly such studies as Flooring Wood Panels and Oriented Strand Board, as well other studies in the Construction and Building Products and Consumer Goods areas. Freedonia Custom Research is also available for questions requiring tailored market intelligence.