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.

Sanctions, War, & Indirect Effects

So you think your business won’t be impacted by the fighting in Ukraine and accompanying sanctions on Russia? Maybe…

But do any of these statements sound familiar?

“I don’t source my wheat from Russia.”

Other companies do and substitutes for Ukrainian and Russian wheat have to come from somewhere.

Global food processors that typically source from Ukraine and Russia might approach US farmers and processors to get what they need. Result: rising prices for wheat worldwide.

“We’ll transition to electric vehicles as a way around Russian oil and rising gas prices.”

That might a good long-term strategy to become less dependent on oil in general, and many companies are making moves in that direction with stated goals to convert their fleet.

But that won’t necessarily help if you’re in Europe, where your electricity might still be generated by Russian natural gas.

It also might not be much near term help if you can’t get access to a hybrid or electric vehicle to replace your conventional gas-powered vehicle. Semiconductor chip shortages and supply challenges in accessing parts of all stripes are still leaving car dealers and medium- and heavy-duty vehicle vendors with reduced inventory and potentially long wait times.

“I source from Eastern Asia & the EU, not Russia.”

Closures of ports and changes in air space regulations and allowances might slow the international flow of goods, even if they don’t actually come from Russia. Russia is a very large country, so any shipping routes (air, land, or sea) that need to go around Russia or its ports could take longer and require more fuel. Result: potentially more time to ship and rising shipping costs in an era already challenged by high shipping costs and long lead times.

Freedonia analysts will continue to watch changes in sanctions and economic losses (crops, industrial and transportation infrastructure, worker productivity) as well as both the direct and indirect effects leading to price changes or opportunities to supply goods and services into new markets.

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.


COVID-19: Back to the Office?

COVID-19 infection, hospitalization, and death updates no longer dominate the news. The wave of infections from the Omicron variant has ebbed.

CDC and state and local governments and health departments are loosening COVID restrictions, including requirements to wear a mask or to verify vaccine status when entering indoor spaces such as restaurants, offices, retail stores, and event spaces.

A growing number of companies are again announcing return dates in March and April, calling workers back at least one or two days per week.

So everyone is headed back to the office, right? Maybe…

But now we’re seeing gas prices rising dramatically, particularly as the Biden Administration today announced an import ban on Russian oil:

  • This could make commuting a lot more expensive, leading workers to push back on the return to offices as gas prices rise and transportation accounts for a larger share of household budgets.
  • There could be a social movement or other type of interest in making sure fuel resources are allocated for emergency vehicles, public mass transit, and for the transportation of needed goods throughout the country and locally.

Still, businesses that rely on workers returning to the offices are investing in innovations and new ways to market to these workers. For instance, Sweetgreen, a company that has traditionally had lunchtime and away-from-home workers as its target customers, is rapidly expanding its Outpost program again. The company is now up to 500 Outpost locations (spots in office buildings, hospitals, and other places where customers can pick up remote orders without going to a restaurant or incurring delivery costs), with 17 more opening this week.

Freedonia analysts will continue to watch corporate return-to-office plans and companies making moves to seize potential opportunities involving office workers, the flex workers, and the remote workers.

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      Covid-19    

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    

Inflation & Substitution Spending

As prices for certain products have risen and continue to rise, customers are faced with two main issues:

  • When to spend their money (Are prices going to get higher? When/if will they come back down?)
  • What to spend their money on (Which of my alternatives are the right value?)

This entry will focus on the second of those two questions – what to spend. If consumers believe that prices are not coming back down or at least not coming down within their particular time frame, their focus shifts toward which alternatives represent the best value.

Therefore, rising prices doesn’t necessarily mean that consumers will not be spending money. It might mean that they will spend their money differently than they would have if prices were more stable.

For instance, consumers still need the basics – e.g., food, shelter, transportation – and even the not-entirely-basics like recreation. Still, consumers have choices within those categories.

There is the long-held view that consumers move along the value chain in times of economic uncertainty – perhaps from Macy’s to Kohl’s to Target and from Whole Foods to Kroger to Aldi to Family Dollar.

The questions businesses must ask then include:

  • What is the value alternative for my product or service?
  • For which product or service is mine a value alternative?
  • How can I position my product or service as the best value? (long life, reusable, etc.)

Opportunities, therefore, exist for products and services that are seen as a value compared to competitive alternatives. For instance, private labels are less expensive than comparable branded products, and investing in home recreation products which can be used repeatedly might be seen as a better value over one-time travel or experiential spending.

Freedonia analysts will continue to watch how inflation trends affect consumer spending, from delays to substitutions.

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    

DoorDash – Expanding From Restaurant Delivery into Logistics for Dine-In As Well

This week, DoorDash announced that it would buy table-side contactless ordering and payment technology firm Bbot. This is part of the company’s move into technology areas, particularly restaurant logistics.

DoorDash seems to plan subscriptions to restaurant logistics services from table-side ordering technology to online ordering and delivery. This allows restauranteurs to focus on their core competency, which is usually the food. It’s also a good avenue for DoorDash as well. First-party logistics for use by the restaurants should be a more stable and profitable business extension as it relies more on technology and less on the expensive labor, which is a challenge for its original online ordering and delivery business.

One question would be access to consumer's data. Unless there is some sort of firewall or agreement about data ownership, DoorDash would be accumulating a treasure trove of information about demographics and ordering habits/preferences coming from those doing their online ordering and delivery and customers using the tableside technology.

Some restaurants have been bothered by orders going directly through third-party delivery firms such as DoorDash, GrubHub, UberEats, etc., as those firms get the customers' contact info and buying habits that the restaurants would want for marketing. However, restaurants might be more inclined to share the data with DoorDash if they weren’t frozen out of seeing who the customers are and what they like to buy.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Foodservice Single-Use Packaging and Food Carryout & Delivery (update in progress) from our sister published Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Food & Beverage      Packaging