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.

Return to the Office?

Much was made this week of Elon Musk demanding Tesla workers to either return to the office at least 40 hours per week or resign.

While some companies are increasing the expectations that their workers be in the office more frequently, this isn’t a trend that holds everywhere. Especially in metropolitan areas famous for long commute times.

This week, the Wall Street Journal reported that there was a high correlation between long average commute times and reductions in office occupancy. “Eight of the 10 major cities with the biggest drop in office occupancy during the pandemic had an average one-way commute of more than 30 minutes in 2019. Meanwhile, six of the 10 cities with the smallest drop in office occupancy have average commutes of less than 30 minutes.”

But why are there long commutes in the first place?

First, there are the factors that drove workers to live further away from city centers, including:

  • lack of housing, especially affordable housing, close to where the jobs
  • seeking out better schools
  • desire for more green space
  • concerns about urban crime

But we can’t ignore the fact that transportation infrastructure hasn’t kept up with changes in demographics and commuting patterns.

As employees who could work from home during the pandemic did so, they learned that they could do their work just as well from home. Some even moved further away from city centers to get more space for a home office and/or more outdoor space.  While many missed the camaraderie of lunches with co-workers and chats around the coffee pot, they discovered that the absence of a long commute returned time to their day. The daily grind of the commute was more tradition than necessity.

What might come of this?

  • More companies may open satellite meeting or work spaces closer to where their employees live.
  • If more funding can be provided, transportation infrastructure – from roads to public transit – can be improved to shrink commute times.
  • Excess office space can be converted to residential space to allow more workers to live closer to urban work spaces.

These longer-term possible developments would allow the creation of more balanced neighborhoods.

Freedonia analysts will continue to watch these trends to see how remote-work, return-to-work, and urban and suburban office adjustments change not only construction activity, and where service business locate and how they operate, but also how we live in general.

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

  Custom Research      Industry Studies    

Rising Prices Are Another Reason for Out-of-Stocks at Grocery Retailers

Grocers are pushing back against food suppliers over rising prices.

Some grocers are refusing to stock goods if the food suppliers can't justify their price increases, won't negotiate, or won't delay price increases...especially if they have a similar item (e.g., another brand, same product in a different package size, fresh v. frozen) that is selling well.

This is expected to have an effect on product assortment at your local grocery store. There will likely be fewer new products, more store brands, possibly fewer specialty items, and different cuts/types of meat, among other effects.

Even if the negotiations with food suppliers don’t result in lower prices, it's good press for the grocers to be able to tell their shoppers they are fighting for them.

On the other side of the coin, food suppliers know they have to watch out for customers who might find alternatives and start switching which products they buy. While they have to guard against loss of profit margins, it's expensive to win back a customer after they have developed new shopping habits.

Our expectation is that this trend is not limited to food and will also be happening – where it isn’t already – in other markets and industries hit harder by inflation. More companies are pushing back (where they have the power) and seeking alternatives.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, especially coverage in the Consumer Goods markets, Packaging industries, and Automotive & Transport industries, as well as Food & Beverage coverage from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Custom Research      Food & Beverage    

Post-COVID Plans: Weddings, Working Out, Traveling, and…

Did you put off some a life event because of the pandemic? You’re not alone. This year’s wedding season is forecast to be one of the busiest in recent years with the number of couples expected to marry rising 15% over recent norms.

Do you have a bad pandemic habit to break? You’re not alone there either. Despite our increased healthy habits like hiking and walking the new dog and trying plant-based foods, the “quarantine 17” (pounds, that is) and increased drinking habits were the flip side. Many of us are now looking for ways to break some of our less-than-healthy habits.

Are you sick of your own backyard? Well, despite the continued investment in home spaces, some people are. The cruise industry is looking at a rebound in bookings and booking sites such as Vrbo, Airbnb, KAYAK, and others are seeing strong demand for spring and summer travel despite high gas prices and rising airline ticket rates.

Key business opportunities in the coming months and next few years are going to center around things we missed out on or what will help us return to “normal” (whatever that is). This will include services as well as related products and equipment from save-the-date magnets and formal apparel to workout gear to luggage and more. The challenge will be for companies needing to have the staff and products to accommodate this shift in demand.

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

  Consumer Goods      Custom Research    

The West Comes Together to Enact Harsher Economic Sanctions on Russia

After the initial measures taken by the West to prevent Russia’s invasion of Ukraine failed, the goal of new economic sanctions has moved from deterrence to punishment.

Western backlash to Russia’s invasion of Ukraine has been uniformly severe. Some significant new economic sanctions were implemented on February 24 by the US and the European Union, including:

Over the weekend, the severity of the sanctions was ratcheted up significantly.  Among the most impactful of the new measures were:

  • banning Russia from SWIFT system access: Russia has now been cut off (as Iran was in 2018) from access to the SWIFT financial messaging system that facilitates rapid and secure cross-border payments. While Russia has its own internal alternative to SWIFT, it is far less sophisticated, and thus an exclusion from SWIFT will impose massive costs on the country, particularly in the short term. Initial holdouts from Germany, Italy, and Hungary, which in part wished to keep SWIFT expulsion as a deterrence against further Russian transgressions (with some feeling that extensive business ties between banks in these countries and Russia also fueled reluctance), softened their stances over the weekend in order to support harsher sanctions.
  • US sanctions on Russia’s central bank: The Biden administration moved to prevent Americans from doing any business with the Russian central bank and to freeze its assets in the US, which, as of Monday morning, was helping to send Russian markets into meltdown  

These measures will substantially impact both the Russian and global economies.  Metal commodity prices will be especially impacted in the areas in which Russia is a major player, discussed in an earlier Freedonia Impact Tracker.  Additionally, industries that rely heavily on exports to Russia will be affected by a short-term free fall in Russian consumer purchasing power, as the value of the ruble had declined by about a quarter as of Monday morning relative to its Friday level.

Given the substantial escalation of sanctions on Russia, will its energy sector be next? Oil and gas account for 60% of Russia’s exports and 36% of its budget revenues, and restrictions on the import of these products in the West would be the clearest way to strike a devastating financial blow to Russia. However, it is unlikely to be targeted in the near term. A big reason for this is fear of driving oil and gas prices higher. Surging energy prices were a key concern for consumers before the invasion of Ukraine, and already, oil prices have jumped over $100 a barrel as many fear the conflict may lead to a supply disruption. Punishing Russia’s energy sector would push prices even higher, which would be unpopular to both to Western consumers and governments. Additionally, Europe – which currently relies on Russia for 40% of gas consumption – would not be able to entirely shift away from Russia and toward smaller supplier countries in the short term even if it wanted to.  However, other steps have been taken that may harm the Russian energy industry in the long-run, such as Germany mulling an extension of the lifespan of its nuclear power plants, which would reduce its dependence on Russian gas.

Freedonia analysts continue to watch changes in geopolitical positioning – including any additional sanctions that might accompany this crisis – as well as related effects on the supply of key industries and currency fluctuations.

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.

  Custom Research      Industry Studies    

Labor Challenges: Where Did the Workers Go?

Labor issues are a common theme among the news and among analysts around the virtual watercooler... but just where did these people go?

  • Some left for better paying jobs in other industries
  • Some left for better working conditions in other industries
  • Some retired
  • Some died as COVID-19 hit the US population hard
  • Some left the workforce to provide caregiving for family members, children and/or the elderly, especially with remote schooling, limited access to quality day care, concern about elder care living facilities in light of pandemic isolation and tight staffing, and an aging population
  • Some chose to work part-time
  • Some did not immigrate, as international movement slowed in the pandemic period

Many companies have been turning to automation and artificial intelligence to cover the gaps. However, public policy and workplace innovations will be needed to fill the gaps left by these changes in the workforce. To be clear, changes were needed as the retirement of the large baby boomer cohort was inevitable and pending, but pandemic era-related changes accelerated the need.

Freedonia analysts will continue to watch trends affecting the workforce, from labor participation, immigration, and retirement trends to automation, employee incentives, workplace flexibility, and other solutions.

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.

  Custom Research      Industry Studies