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.

Necessity Is the Mother of Invention: Shortages Propel a New Idea in Paint

There has been some amount of paint shortage over the past year…not only from the supply end from outbreaks slowing production that we’ve come to expect and even build into assumptions in recent months, but also the kinks from the February winter storm in Texas that slowed production of key supplies. Additionally, the boom in pandemic-era home renovations – and painting has been a popular DIY activity – raised demand at the same time.

What has been one of the big losses? Paint sample cans. Companies would rather be able to supply enough for customers’ projects, but classic paint chips are not enough for many customers and particular interior designers to select the right color.

The solution was the rapid adoption of what had been a niche option: peel-and-stick paint samples. In some locations, quart sample options were either not available or customers were at least being actively directed toward the peel-and-stick option as most major paint suppliers had arrangements with Samplize. While people tend to have a preference for the way they’ve always done things, these peel-and-stick options had benefits too:

  • Ecofriendly: less waste as customers receive a 12”x12” swatch rather than a whole small can
  • Convenient: they are repositionable (so you can test it in more than one place/no wall damage) and easy to use (no paint mess/clean up, already in 2 coats without waiting to dry) 

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, particularly titles such as Global Architectural Paint and Global Paint & Coatings. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

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

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    

Food & Beverage Companies Are Still Growing, Even Off the Spike in Retail Sales in 2020

Food and beverage sales at retail are holding strong so far in 2021, even when compared to the 2020 stock-up trends that occurred in the early months of the COVID-19 pandemic. But what else is going on in 2021 for packaged and fresh food suppliers?

Below are a few trends to watch, affecting the food and beverage industry across most categories:

  • Food prices are rising in a significant way. Sometimes these rising prices are coming from increased sales of higher value versions (e.g., the rise of plant-based or organic versions) and sometimes they are due to rising costs of ingredients, packaging, and shipping being passed along. This is propelling gains above what would be expected when looking at volume sales or inflation adjusted value gains.
  • The foodservice market is coming back. As traditional restaurants reopen, expand operational capacity, or see more in-person diners, sales to this market are trending up. This will be especially important for foods aligned with quick service or fast food options (e.g., semi-prepared foods and frozen foods). Fresh food might still be slower as restaurants will be cautious about overbuying so as not to get burned by having too much fresh stock as in 2020.
  • Foodservice is not just restaurants. Schools and colleges are expected to reopen to more normal operations (in-person learning, on-campus dining/living) in the fall. Cafeterias at hospitals, offices, and other places are also reopening. Also, it’s worth noting that rising vaccinations will correlate with increased foot traffic at malls and their food courts, and more visits to recreation places like amusement parks, museums, and zoos, along with their corresponding food and snack stands.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area, as well as Food and Beverage industry analysis from our sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Food & Beverage      Packaging    

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    

What Tells You Things Are Heading Back to “Normal”?

Instacart recently released a blog entry talking about something they are calling “the Pudding Pack Index.” The company suggests that increased orders of classic lunchbox items like pudding packs, granola bars, and fruit snacks are solid indicators that the US economy is returning to normalcy – a sign that kids are going to school or camps, that families are going on vacations (particularly road trips), and parents are returning to their workplace.

Our economy is full of such informal modes of evaluation. For instance, a former FEMA director suggested the “Waffle House Index” – or the ability for local Waffle House restaurants to be operating – is a good indication of the severity of storm event.

So what other core indicators might we look at now that could portend a return to normal?

  • Vaccine Rates: That’s an obvious one…vaccinated people are more comfortable resuming their previous habits and can better do so safely, even if the adjustment may not be rapid due to newly formed habits or ongoing concerns about variants or unvaccinated family members
  • Brick & Mortar Store Traffic: Now, many people are likely to retain their online shopping out of convenience and new habits, but returns to in-person shopping indicate normalization
  • Office Occupancy Rates: The return – at least partially – of workers who shifted home during the pandemic would boost traffic at foodservice restaurants and aid the sagging commercial real estate industry
  • Miles Driven: Increases here would indicate more people commuting to work and more people traveling
  • Improvements in Retail Apparel Sales: Once we decide to set aside our pandemic athleisure and start buying fresh outfits for special events, evenings out, and professional looks, we’re planning for a life away from our couches and home offices

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      Construction & Building Products      Consumer Goods      Covid-19      Food & Beverage      Packaging      Services      Textiles & Nonwovens