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.

Drought & Water System Allocations: More Cuts Ahead

Some of us have followed stories of boats, bodies, and other things that have been found as Lake Mead and other western lakes and rivers fall to historic low levels amid a long-running drought in the Colorado River Basin.  

Current projections show that Lake Mead’s water level will fall below 1,050 above sea level by January, triggering a Tier 2 shortage and dramatic cuts to water allocations. Especially hard hit will be Arizona, which faces cuts equivalent to 21% of the state’s annual allotment from the Colorado River.

States and municipalities have made uneven changes in water use regulations throughout the Colorado River Basin. Below is a brief discussion of what sorts of measures are needed, either more broadly or as a starting point where not yet implemented. Opportunities exist in the innovations and adaptations that make water use reductions measures such as these possible:

  • reductions in or the elimination of thirsty decorative landscaping like conventional lawns and non-native plants, in favor of hardscaping and drought-resistant native plants
  • appliances that reduce water requirements or make use of gray water in non-potable applications
  • plumbing that more efficiently disperses less water to a similar effect and upgrades that guard against leakage and unnecessary water loss
  • smart agriculture that plans crop placement and soil treatment to minimize water needs, along with more efficient irrigation and switching to less water-intensive farming either by changes in process or in types of crops planted
  • water treatment processes including advanced membrane separation processes that recycle waste water back into water basins, whether for non-potable or potable use or both, and make lower quality water sources available for use

Freedonia analysts continue to watch factors such as drought conditions, water treatment technologies, agriculture and landscaping innovations, and climate change trends.

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

  Custom Research      Industry Studies    

Too Much…: Overstocks Challenge the Economy

A lot has been made recently of the supply chain challenges and rapidly shifting demand trends messing with ordering as suppliers and retailers hope to have enough, but not too much, on hand. In some cases, too much is exactly what happened.

Some retailers found that the long-awaited grills, camping equipment, bicycles, home office chairs, small specialty cooking appliances, portable pools, and other items that were red-hot in the early days of the pandemic finally arrived from that literal slow boat from China (and after being stuck in offloading lines at ports) just in time for consumer demand to shift to restaurants, travel, and other “post-pandemic” dreams. 

Even if suppliers and retailers could see the shift in consumer demand coming, would it have been fast enough to change these earlier orders? Not likely.

But what to do with stocks that are now not the must-have items:

  • Warehouse for next season. However, warehouse space is at a premium right now and costs of goods being delivered are high given still elevated shipping prices. Will it be worth it to store the products?
  • Sell it at a discount now. In an inflation-era, deals still abound. But do consumers want or still need it, regardless of the price? And what do these discounts do to consumer pricing expectations going forward?
  • Let liquidation companies take it on. This lets suppliers and retailers take some guaranteed money now, cutting their losses at a defined point rather than potentially extended time line where costs could keep rising. It also helps protect against consumers coming to expect deep discounts on a routine basis for brands that would likely prefer to keep some premium perceptions among consumers.

Freedonia analysts continue to watch factors such as stock levels, shifts in consumer demands, evolutions in supply chains, and inflationary trends for direct and indirect effects throughout the economy.

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 and Packaging industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Custom Research      Packaging    

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