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.

US Home Building Declared Essential by Department of Homeland Security

Building and construction professionals across the nation were cheered by the recent decision by the Department of Homeland Security (DHS) that home building was an “essential” business. While individual state and local authorities can issue regulations more closely defining what is an essential business, the inclusion of home builders by the DHS in its list of essential industries means that – in many jurisdictions – the erection of new single-family and multifamily housing units can continue.

This declaration underscores the importance – even in a time of pandemic – of the home building industry to the US economy. In addition to the millions of jobs the industry provides, the US faces a lack of affordable housing, something which can only be remediated by the construction of new homes and apartments. Integral to the recovery of the US economy after the COVID-19 pandemic subsides will be the addition of new and affordable to nation’s housing stock.

While construction of new homes will continue in many parts of the US, state and local governments across the country are working to limit the spread of coronavirus on job sites by requiring:

  • social distancing between workers
  • limited numbers of subcontractors on a job site at any given time
  • periodic temperature checks of workers
  • frequent cleaning and sterilization of tools and equipment

For more information about the US home building industry, see The Freedonia Group’s coverage of the Construction and Building Products industries.

Expanding Range of Manufacturers Declared “Essential” Shows Importance of Construction Industry to Nation

April 2, 2020 - The US Department of Homeland Security issued revised guidelines as to which firms could be considered “essential” and thus could remain in operation during the COVID-19 pandemic. Among the firms specified by the DHS were those involved in the production of:

  • cabinets
  • windows and doors
  • plumbing products
  • heating, ventilation, and air conditioning (HVAC) equipment
  • paints and coatings
  • store fixtures
  • appliances

This revised guidance as to what is considered to be essential demonstrates the continuing importance of the nation’s construction industry, even in times of crisis. The US faces a shortage of affordable housing units and – in many areas – will require additional medical facilities to treat those affected by COVID-19 and other ailments.

By declaring that firms manufacturing those items used in homes, medical facilities, and other structures, the US is signaling its commitment to ensuring that the US will not only continue to fight coronavirus but also to ensure that the economy – once the pandemic ends – can return to normal as quickly as possible.

For more information about the US cabinets, windows and doors, plumbing, HVAC equipment, appliances, and paints and coatings industry, see The Freedonia Group’s coverage of the Construction and Building Products industries.

Lumberyards & Hardware Stores Declared Essential Businesses

A number of governors – including those of our most populous states – have closed all but “essential” businesses in an attempt to limit the spread of the coronavirus.

Fortunately for the construction industry, most governors have included lumberyards and hardware stores as among those businesses classified as essential. In many cases, owners and industry associations have pushed to keep these business open due to such factors as:

  • the large number of people employed by the industry ­– not only by lumberyards and other retail outlets, but also in the construction industry as a whole
  • the key role lumberyards play in ensuring that construction materials can reach contractors and other construction professionals
  • the broad range of products offered by these stores – many of them carry items essential to health and safety, such as cleaning supplies, waste receptacles, toilet paper, and wipes, as well as items needed to maintain a house, which become more important as consumers are told to stay at home
  • the ability of stores to deliver goods while minimizing contact – such as by limiting hours, arranging for curbside pickup and delivery, or by coordinating deliveries when few people are at job sites

Indeed, as state and local authorities increasingly consider erecting temporary medical facilities or converting existing structures (such as college dormitories) into sites for housing coronavirus patients, demand for building materials is expected to climb: proving that the nation’s lumberyards, hardware stores, and other construction products retailers are “essential”.

For more information, see The Freedonia Group’s extensive research on the construction & building products industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Decline in New Home Construction Can Affect Multiple Industries

Reports that coronavirus will cause a slowdown in new home construction could have a severe impact on a number of construction-related industries across the US. In addition to the economic disruption caused by the temporary layoff of the thousands of employees who erect America’s homes, a steep decline in home building would also affect such industries as:

  • lumber mills that supply the wood products intensively used in home construction across the US
  • plants that supply prefabricated components – such as roof trusses and wall panels – that are increasingly being used to speed up construction
  • fastener manufacturers, many of whom were buffeted by the imposition of tariffs on metal imported from China, when they often used to make nails, screws, bolts, and other fasteners
  • producers of the many items need to finish a home: roofing, siding, flooring, plumbing products, drywall, cabinets, countertops, and wiring
  • landscapers and garden supply firms that provide and lay down the lawns and outdoor spaces cherished by homeowners
  • concrete suppliers who pour the foundations and slabs on which homes are erected

For more information about these industries, see The Freedonia Group’s coverage of the Building and Construction Industries.

Possible Construction Supply Shortages?

Developers are starting to wonder about the impact of COVID-19 on their ability to complete existing projects or to begin new large projects.

US and European contractors rely heavily on Chinese imports for building products ranging from steel to wiring to cabinets. Work stoppages at China’s manufacturing facilities and ports have constrained supplies for building products, leading to delays in the receipt of crucial materials that were not shipped prior to major shutdowns.

Financial fallout for both contractors and customers is expected, although the total impact will vary significantly based on the duration of the outbreak. Although major projects purchase the supplies they need well in advance and therefore may not be effected, others may not be so lucky.

In the meantime, firms are looking for alternate supply channels – both in the US and outside of China – even though they are more expensive. Additionally, contractors may be looking to buy up available supplies in order to have a stock on hand, which would drive prices up even further. Overall, these behaviors drive up prices and shift demand.

As a result, even construction material firms with adequate domestic supplies available to sell might be challenged by unpredictable sales trends that contradict typical seasonal patterns.

For more information, see The Freedonia Group’s extensive collection of reports on the Construction & Building Product industries.