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    

Urban Living Transitions: Tier 2 Cities, the Suburbs, & Rural Areas

A much discussed trend of the last few years is the pandemic era exodus from cities to the suburbs and rural areas…and potentially back again.

However, something to keep in mind: the Census figures being discussed in many of these articles are for the actual city boundaries, not metro areas. So when you see cities like Chicago and New York losing population, it includes people shifting to the suburbs just outside the city limits. In that way, it is still counted as the city losing population, even though people may not have moved that far away.

What makes those who move away from urban centers more likely to stick with their choice? It depends on their homeownership status and if they have kids. Homeowners are stickier in their location than renters are as the transaction costs to sell are much higher than moving at the end of a lease (or even breaking a lease, in many cases). Additionally, the move to the suburbs for the schools and larger yard when you have kids is an old story that repeats with each generation.

Still, for every article that has Millennials loving their new exurban lifestyle, there are ones about pandemic homebuyers who are miserable with the move to homeownership. They have maintenance responsibilities they didn’t have as renters and might be house-poor now, lacking the cash for the travel and events they would like to resume as the pandemic feelings ease.

But what are the effects of this movement – no matter the direction?

There are many implications to this trend. From building construction needs to the type of things consumers will be spending their money on. For instance, if you have that house now, are you investing in lawn and garden care equipment and supplies? Are you investing in a new deck? Are you buying paint and furniture? Or are you spending on travel and events and dining out?

Furthermore, this shift has implications also for infrastructure. Can investment in public transport and urban bike lanes be justified if city populations are falling and fewer people are commuting into the city?

This move to smaller cities, suburbs, and rural areas could also cause trends to spread differently. Classically, as people move, they take their tastes and preferences with them to their new homes. A primary example is the spread of international food trends along with immigration. While urban centers of Tier 1 cities are often the source of trends – from food to recreation to style and beyond – that might change. First, those leaving the urban centers will bring those tastes with them and businesses will form in smaller cities and suburban areas to give them what they want.

So not only will moving to the suburbs change the habits and preferences of the former urban dwellers, but their movement into the suburbs and rural areas will change these locations by their arrival. This could lead to trends spreading faster into smaller cities and rural areas.

What should we watch? Remote work trends are worth watching as it is a good part of seeing whether the exodus from urban centers holds. As more people no longer needed to consider commute times in selecting where to live, they could cast their real estate nets a little wider, sometimes even out of state. This opened up options to these people, and since they bought homes, they are now more sticky in their location compared to urban renters.

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.

  Industry Studies    

What Will It Take to Make Remote Workers OK With Returning to the Office?

Freedonia’s analyst, editorial, economist, custom research, and marketing teams assembled in person at the Cleveland, Ohio office this week along with new staff in business development and the content team from Simba Publishing, our sister published brand. We shared ideas, developed new plans, discussed the factors in play underlying changes in our economy, and shared how key trends impact activity across industries. Our space included open and spaced out meeting areas, open windows kept the air flowing, and we used technology to include those who were unable to join us in person.

What would it take to make workers comfortable in the office? Two factors jump out. Clean air and lower commuting costs:

  • Wellness factors have long ranked high for many workers. Is the facility clean? Are there hygiene measures in place? How is the air quality? These trends accelerated in the pandemic era as workers prioritized the use of air filtration, ventilation systems, humidifiers/dehumidifiers, and indoor plants as ways to keep workers healthy. More companies and commercial building owners upgraded their HVAC systems, often incorporating HEPA filtration or improved fresh air exchange capabilities.
  • Commuting costs have more recently become an issue. With gas prices rising to levels not seen in decades, workers wonder why they have to spend more money to get to work when they were able to do their work remotely without the cost and time of commuting. Some companies are organizing carpool groups among workers or hiring a company to provide free vanpooling for multiple workers from multiple central locations. Other companies are offering bonuses, sometimes in the form of gas cards, to workers who return to the office more often.

Either way, businesses will continue to use creative responses and investments in their workers to retain staff. The most successful businesses will make the measures they incorporate meaningful to their particular staffs. The health of the commercial real estate market and business districts around the world rely on getting this balance right.

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


Close the Loop: Turning One Industry’s Waste Into New Products

Most of us know the old phrase “One person’s trash is another person’s treasure”, and this article about a company that converts decommissioned airplane cabins into pod-style units for home offices, children’s play space, and guest spaces illustrates that old adage still holds.

In a world where “green cred” is often a marketing advantage, building a business or product line using some sort of waste product has its advantages. In many cases, there are cost advantages too. For industries that see the material as waste, it’s a cost. They must pay for the waste to be taken away to a landfill or recycling facility. In those cases, it can be an advantage to give companies seeking to repurpose the waste a very good deal to take it away. Doing so also helps the company that created the waste to be able to show customers and shareholders that it is responsibly dealing with its materials or products at the end of their useful lives, something that is increasingly part of how a company is evaluated. If a business operates under an extended producer responsibility law, the need is ever more urgent.

In the end, creativity is the name of the game as firms seek to reduce landfilled waste and create business opportunities from waste.  

Freedonia analysts will continue to stay on top of ways industries reduce their waste and track their products through the end of their useful lives, sometimes creating new business opportunities.

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.

  Consumer Goods      Industry Studies    

Sanctions to Severely Impact US Exports to Russia

Severe sanctions placed on Russia by Western countries in retaliation for its invasion of Ukraine will have a crippling impact on the Russian economy. The blowback from these sanctions will hit US businesses as well. Per the US International Trade Commission, Russia was the 39th largest recipient of US goods exports in 2021, valued at over $5 billion. US exporters to Russia will be impacted by these sanctions in three big ways:

Freedonia analysts will continue to watch how sanctions and their after effects further along supply chains impact US and global economies.

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.

  Consumer Goods      Industry Studies