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.

Overall June Retail Trends: Price Increases + Continued Opening = Additional Growth

The most recent retail sales report for June 2021 showed overall growth in retail activity, boosted in part by two key trends – price increases and continued opening of the economy. Ongoing concerns about plateauing vaccination trends and the spread of the Delta variant put some moderating pressure on trends.

Overall, retailers that saw the best gains had stocks and services that were linked to the away-from-home experience or simply benefited from the change of seasons and the warmer summer weather. Specifically, food service establishments and apparel retailers saw the best gains.

Some categories – including auto sales -- slumped amid ongoing supply chain challenges. Additionally, categories associated with home – such as furniture, sporting goods, and building materials retailers – slowed from May levels.

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    

Latest Retail Sales Report Indicates Continuing Strength of Construction Market, Despite Dip From May Sales

The most recent retail sales report for June 2021 revealed another month of strong sales for building materials and garden equipment and supplies distributors. While on a month-to-month basis retail sales in the category posted a modest decline from May, compared to last year at this time, sales of building materials and garden equipment and supplies were up more than 18%.

A number of factors supported sales of building materials and related products in June 2020, key among them:

  • continuing high levels of new home building activity
  • strong homeowner interest in home improvement projects
  • a retreat in lumber prices that encouraged those who had postponed projects due to the high cost of lumber to undertake them once again
  • favorable weather conditions that encouraged homeowners to work in their yards, which boosts sales of garden products, or engage in outdoor activities – promoting sales of such items as swimming pools and toys and games

Summer is traditionally a strong season for building materials and garden equipment and supplies retailers, and it is anticipated that sales in this market segment will remain robust going forward. Indeed, the prospect of continuing declines in lumber prices and increasing consumer confidence is expected to spur retail sales in this segment for the rest of the year. Freedonia experts will continue to monitor retail sales in this category  – and others – to see how this affects the US economy as a whole.

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


Own All Four Railroads? “Monopoly” Might Be a Bit More Difficult Soon

An executive order signed in early July laid out the Biden administration’s plan to reduce the strength of monopolies across the US economy. In the freight industry – namely, freight by rail and freight by waterway – the administration believes consumers and small companies are at a disadvantage due to the power of the limited number of major players.

In the rail industry, competition is largely limited by high concentration – the four largest firms control the vast majority of the market – and each rail company’s captive control of its rail system. The executive order encourages the Surface Transportation Board to adopt a system, known as “reciprocal” or “competitive switching”, which has been proposed many times in the past. If put in place, rail shipping customers that are served by one railroad are able to accept bids from competing railroads in the area. The bidding company would pay a fee to utilize the dominant railroad’s infrastructure, increasing the number of potential choices rail shipping customers have among railroad firms and placing downward pressure on shipping rates. Furthermore, it may open the door for smaller rail shipping firms to increase their market share.

For ocean shippers, the executive order encourages the Federal Maritime Commission to take further action to reduce export fees and allows the Justice Department to enforce their decisions.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, as well as Freedonia Focus titles such as Freight by Waterway: United States, Freight Services: United States, Freight by Rail: United States, and Freight by Truck: United States. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19    

Revised Sales Figures Show Continuing Strength of US Kitchen & Bathroom Remodeling Market

The US home improvement market continues to be a source of strength for the US economy, as consumers remain interested in remodeling and adding on to their homes. A recent update by the National Kitchen & Bath Association demonstrates the strength of this, showing that spending on new kitchens and bathrooms is projected to rise more than 20% in 2021 – a substantial increase from its previously published figures.

In the new residential market, spending will be driven by strong new housing activity, as home builders capitalize on high demand for single-family by erecting new residences as fast as they can – despite high prices for building materials and shortages of lumber and other key products. Many of these newly built homes will feature large kitchens and multiple bathrooms (including master bathroom suites) to entice buyers.

In the much larger residential remodeling segment, many homeowners will seek to purge the memories of the COVID-19 pandemic by completely changing the residences in which they spent so much time over the past year. Kitchen and bathroom remodeling projects will be among the work most often specified by homeowners as they modernize the look of their homes or add features to enhance comfort and convenience – such as more and larger bathrooms with his-and-her sinks, senior-friendly toilets and bathtubs, and touchless fittings, or kitchens with more space for meal preparation and to store the new kitchen appliances that saw intensive use during the past year.

This surge in kitchen and bathroom activity will drive demand for a wide range of products, including:

  • cabinets
  • countertops
  • appliances
  • plumbing fixtures (sinks, toilets, and bathtubs and showers)
  • plumbing fittings (faucets, showerheads, flush valves)
  • pipe, valves, and fittings
  • hard surface flooring (especially decorative tile and luxury vinyl tile, or LVT)
  • paint, drywall, and other interior finishing materials

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly such studies as Home Kitchen & Bathroom Remodeling, as well other studies in the Construction and Building Products and Consumer Goods areas. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Construction & Building Products      Consumer Goods      Covid-19    

An Unexpected Development in Multifamily Housing: Larger Apartments

Something we have frequently chronicled on this blog is the strong demand for new housing across the US. While this has fueled the construction of single-family housing, the fact remains that the shortage of available – and affordable – housing has in turn led to calls for an increase in the construction of multifamily housing units (e.g., apartments and condominiums). Apartments and condominiums do have some advantages over single-family homes, key among them affordability – rent is often less costly than a mortgage payment in many markets – and the generally larger number of living units that can be included in a multifamily housing complex.

Thus, a recent article describing increasing construction of larger apartments shows that the COVID-19 pandemic is affecting this segment of the housing market as much as it is single-family housing. For many renters, larger apartments are a necessity. With hybrid work arrangements increasing becoming common, tenants need designated spaces for home offices – no matter how cozy they may seem. Furthermore, with many people adjusting their lifestyles in the pandemic – and remaining in their apartments more – even modest increases in living space can be seen as an attractive feature to potential tenants.

However, this trend of larger-sized apartments does have some potential downsides:

  • Increases in the size of an apartment means that fewer units will be constructed, at a time when more residences of every type are needed in the US.
  • Similarly, larger-sized will generally command higher rents, potentially pricing out lower-income tenants and those who suffered financial reverses during the COVID-19 pandemic.
  • The mix of building materials needed to construct these larger apartments will also change – more drywall and interior supports will be needed to create these additional rooms, while more flooring, paint, and interior molding will needed to finish these units.

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.

  Construction & Building Products      Consumer Goods      Covid-19