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.

Shortage of Foams Spurs Search for Alternatives & Efforts to Boost Production

The US continues to face a shortage of polyurethane foams, affecting the manufacture of a wide range of products, including:

  • furniture
  • mattresses
  • insulation
  • insulated metal panels and other building materials
  • automotive seating and other components

This shortage of foams has left manufacturers with a number of unpleasant options – temporarily ceasing or limiting production, paying more for raw materials (and hoping customers will pay more for their products), or looking for suitable alternatives. For instance, one company is offering such products as fiber and fiber-and-coil components that can be used in place of foam in mattresses and upholstered furniture. These components can provide many of the properties of foam, such as softness and light weight, while also being readily available.

However, in the expectation that this shortage of foam will be long-lasting, other firms are looking to expand their own networks of foam production sites, thus ensuring a ready supply of this key raw material. For instance, Tempur Sealy International announced plans to construct an additional form manufacturing center to provide materials for its mattresses and other products. While this site will not be completed until 2023, the plant will provide more long-term stability for Tempure Sealy’s foam needs.

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, including Outdoor Furniture & Grills, and Freedonia Focus Reports such as Household Furniture: United States,Office Furniture: United States,Furniture: United States, and Furniture & Furnishings: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

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

High Prices & Lack of Materials Continue to Imperil US Housing Market

The US housing market continues to remain a source of strength for the US economy, with demand at record levels. However, the availability of homes on the market – both newly constructed and existing residences – remains low. A lack of affordable homes for purchase affects both the housing market and the US economy as a whole. Not only will fewer people buy new homes, those consumers who spend more on the purchase of a residence will have less money for other things, potentially dampening the economic recovery as the US comes out of the COVID-19 pandemic.

Unfortunately, US consumers should expect to continue to see a tight housing market going forward:

  • According to one article, prices of the materials used to build and finish new homes – such as lumber, paint, drywall, and appliances – continue to rise, affecting the new affordability of new homes once they are completed.
  • Per another article, builders are continuing to experience shortages of key building materials used to build a home. This affects the ability to complete homes in a timely manner, as contractors and other construction professionals report receiving only partial shipments of key building products, dragging out the home construction process.

When can consumers and construction professionals see relief from high housing prices and shortages of building materials?  In the near term, at least, it would appear that these issues will continue to plague home builders and home buyers alike. Freedonia experts will continue to monitor the US housing market to see when conditions become more favorable for the industry.

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


Acquisition Shows Continuing Consumer Interest in Boating

One unexpected benefit to the COVID-19 pandemic in the US has been that many consumers have rediscovered a love for the outdoors. People – seeking safe ways to hold gatherings with family and friends or looking to “get away” to decompress from the stresses brought on by the pandemic – have embraced a wide range of outdoor activities, from biking to camping. Fishing and water sports have also seen an increase in activity as the US’s long coastline and ample numbers of rivers and lakes provide plenty of opportunities for recreation. A recent acquisition and capacity expansion indicates that many feel that this trend will continue even as the pandemic recedes.

Recently, Wild River Marine Group, one of the nation’s suppliers of marine craft, announced that it was acquiring Hatteras Yachts, a manufacturer of motor yachts and sport fishing boats. Furthermore, as part of the deal, Wild River Marine Group will open a new manufacturing center at Hatteras Yachts’ existing production center, boosting its ability to make a wide range of marine craft.

These moves will also benefit Wild River Marine Group’s corporate parent, Bass Pro Shops – one of the nation’s leading retailer of outdoor products, including boats and fishing equipment. By expanding its production network, Bass Pro Shops will be able to offer a wider range of craft to its customers – both anglers and those simply looking to get out on the water to swim or catch some rays.

For more information and discussion of opportunities, see The Freedonia Group’s study on the topic, Recreational Boating in the US.

  Automotive & Transport      Consumer Goods      Covid-19    

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    

Pair of Acquisitions Highlight Continuing Strength of Building Materials Distribution Market

The US building construction market continues to remain a strong point for the US economy, even as the industry is plagued by shortages of lumber, supply chain issues, and surging demand for products – providing a challenge to retailers to keep needed products in stock. However, continuing demand for new homes and heightened homeowner interest in renovation projects have meant that distributors and retailers catering to the needs of construction professionals have seen brisk business. A pair of recent transactions demonstrates the strength of the building materials distribution segment.

The first – Builders FirstSource’s announced acquisition of Cornerstone Building Alliance SW – will not only add more than $300 million in annual sales to Builders FirstSource’s revenues, but will also greatly expand its presence in the growing Arizona market. Cornerstone Building Alliance is one of the largest building materials retailers in the state of Arizona, serving both residential and commercial customers in the state’s largest markets. Indeed, subsequent to the transaction, Builders FirstSource will be the third-largest retailer of building materials in the US, with over $13 billion in annual sales.

The second – US LBM’s agreement to acquire American Construction Source – will boost US LBM’s market presence in a number of states in the Midwest and West regions of the US. American Construction Source, which reportedly has more than $700 million in annual sales, operates more than 70 sales outlets nationwide, primarily serving custom home builders and contractors specializing in home repairs and renovations. With this purchase, US LBM will further cement its position as a top ten retailer of building materials in the US.

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. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.