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.

Despite Slight Decline, Retail Sales Outlook for Building Materials Retails Remains Strong

The release of the May retail sales report by the US Department of Commerce on June 15 showed that the US market for building materials and construction products remained strong during the month. Retail sales by building materials and garden equipment and supplies dealers declined slightly from their level in April. Some of the possible causes of this decline can include:

  • high prices for lumber and other building materials (such as copper wire and plastic products), which caused some consumers to delay work until prices became more affordable
  • shortages of key materials due to supply chain issues – disruptions in one phase of a project can delay others, and with high prices, builders and contractors may hold off on product purchases until materials are actually needed
  • shifts in consumer spending – with many states and localities “reopening” and lifting restrictions on dining out and other forms of entertainment, many consumers (especially those who have already invested in their homes) might have opted to spend on other things

However, retail sales by building materials and garden equipment and supplies dealers remained strong. Indeed, compared to this time in 2020, sales in 2021 were more than 20% higher. Most building materials and garden equipment and supplies dealers remain confident in the strength of their industry due to such factors as:

  • continuing high levels of new home construction and homeowner interest in home renovation and repair projects, boosting demand for building materials
  • the advent of summer, which means longer days with better weather that allow for more time for construction projects
  • summer is a traditional buying period for both lawn and garden supplies and equipment, as well as the products (pool supplies, outdoor toys) frequently sold at home improvement and garden centers
  • the end of school means more teenagers will be available to work landscaping jobs – offering time-pressed contractors a way to catch up with their backlogs of work

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.

  Construction & Building Products      Consumer Goods      Covid-19    

Shortage of Foams Spurs Search for Alternatives & Efforts to Boost Production

The US continues to face a shortage of polyurethane foams, affecting the manufacture of a wide range of products, including:

  • furniture
  • mattresses
  • insulation
  • insulated metal panels and other building materials
  • automotive seating and other components

This shortage of foams has left manufacturers with a number of unpleasant options – temporarily ceasing or limiting production, paying more for raw materials (and hoping customers will pay more for their products), or looking for suitable alternatives. For instance, one company is offering such products as fiber and fiber-and-coil components that can be used in place of foam in mattresses and upholstered furniture. These components can provide many of the properties of foam, such as softness and light weight, while also being readily available.

However, in the expectation that this shortage of foam will be long-lasting, other firms are looking to expand their own networks of foam production sites, thus ensuring a ready supply of this key raw material. For instance, Tempur Sealy International announced plans to construct an additional form manufacturing center to provide materials for its mattresses and other products. While this site will not be completed until 2023, the plant will provide more long-term stability for Tempure Sealy’s foam needs.

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, including Outdoor Furniture & Grills, and Freedonia Focus Reports such as Household Furniture: United States,Office Furniture: United States,Furniture: United States, and Furniture & Furnishings: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Chemicals      Construction & Building Products      Consumer Goods      Covid-19      Plastics & Other Polymers    

Acquisition Shows Continuing Consumer Interest in Boating

One unexpected benefit to the COVID-19 pandemic in the US has been that many consumers have rediscovered a love for the outdoors. People – seeking safe ways to hold gatherings with family and friends or looking to “get away” to decompress from the stresses brought on by the pandemic – have embraced a wide range of outdoor activities, from biking to camping. Fishing and water sports have also seen an increase in activity as the US’s long coastline and ample numbers of rivers and lakes provide plenty of opportunities for recreation. A recent acquisition and capacity expansion indicates that many feel that this trend will continue even as the pandemic recedes.

Recently, Wild River Marine Group, one of the nation’s suppliers of marine craft, announced that it was acquiring Hatteras Yachts, a manufacturer of motor yachts and sport fishing boats. Furthermore, as part of the deal, Wild River Marine Group will open a new manufacturing center at Hatteras Yachts’ existing production center, boosting its ability to make a wide range of marine craft.

These moves will also benefit Wild River Marine Group’s corporate parent, Bass Pro Shops – one of the nation’s leading retailer of outdoor products, including boats and fishing equipment. By expanding its production network, Bass Pro Shops will be able to offer a wider range of craft to its customers – both anglers and those simply looking to get out on the water to swim or catch some rays.

For more information and discussion of opportunities, see The Freedonia Group’s study on the topic, Recreational Boating in the US.

  Automotive & Transport      Consumer Goods      Covid-19    

Mergers & Acquisitions Are Booming in 2021: Key Factors Driving Increased Activity

M & A activity has been very busy this spring. Across a wide variety of industries, we’re seeing a range of announcements from market leader combos to roll-ups of smaller, regional operations. But what’s behind this rise in activity?

Here are a few key factors driving acquisition and divestiture activity across the economy in 2021:

  • Owners of smaller firms are looking to retire after their businesses’ survived the COVID-19 pandemic (or in some cases, these businesses struggled and owners did not want to rebuild).
  • Certain industries with high pandemic-era sales (e.g., construction goods suppliers, home improvement distributors/retailers, packaged food companies, grocers, lawn and garden equipment and supplies firms) are flush with cash and high stock values and are looking to expand.
  • Pent-up interest from the limited activity of 2020, as transactions that were planned or considered pre-pandemic were put on hold due to economic uncertainty or the difficulty of completing due diligence when you aren't traveling. Some of these previously planned transactions are now going through.
  • Expectations of higher tax rates are leading some firms to cash out now or to make shifts that put them on better footing.
  • SPACs (special purpose acquisition companies) are being increasingly used for acquisitions to expand existing public or private companies.
  • Companies are reevaluating their business operations in the post-pandemic era and are sometimes making changes to what they see as their core operations, or are building on key capabilities that have grown over the course of the pandemic.

Freedonia Group analysts are keeping watch across a wide variety of industries for changes that portend market movements and shifts in the competitive environment.

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.

  Chemicals      Construction & Building Products      Consumer Goods      Covid-19      Energy & Petroleum      Food & Beverage      Industrial Components      Machinery & Equipment      Packaging      Plastics & Other Polymers      Services      Textiles & Nonwovens    

Why Lots of Things We Buy Are Getting More Expensive…

The global economy is seeing shortages and historically high prices for things such as lumber, computer chips, plastic resins, corrugated board/boxes, and chicken – all products that have ripple effects into larger markets such as home construction, vehicle manufacturing, packaged goods, e-commerce shipments, and foodservice... what is going on here?

While there are often industry-specific challenges, there are several factors in common across much of the economy:

  • Shipping issues – there are shortages of containers (or containers in the wrong places), lags in unloading at ports, and shortages of commercial truckers that are slowing road transport
  • Supply constraint
    • from facility shutdowns or slowdowns, whether due to severe weather (e.g., processors of plastic resins were shut down during the February storms in Texas and still haven't caught up) or COVID outbreaks or operational restrictions (e.g., chicken processors)
    • from an inability to ramp up production any faster as some were already operating at full capacity in 2020, and while major investments are planned or underway, there are supply bottle necks at the machinery production level too
  • Demand-side issues as industries saw sales gains that were unprecedented, sudden, and even sustained

While some of these conditions existed in 2020, there were a lot of segments of the economy where we still didn’t see price increases until recently. Why not? Some retailers and manufacturers have had a sort of “decency pressure” on them…they haven't wanted to be seen as taking advantage of a pandemic so they have refrained from raising prices in some cases. However, that period is likely over. With more people vaccinated and fewer people dying, there will be less of a feeling that rising prices indicates profiteering in a crisis. Suppliers increasingly see their price increases as justified and fully in line with their rising costs.

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      Chemicals      Construction & Building Products      Consumer Goods      Covid-19      Food & Beverage      Industry Studies      Machinery & Equipment      Packaging      Plastics & Other Polymers