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.

Everything Old is New Again… Refillable Beverage Containers

Americans used to live in a world with milk bottles that were delivered full and collected empty. Americans used to live in a world where glass beverage bottles were collected and returned for a deposit and then refilled.

There are still parts of the country and certain local milk processors, breweries, and soda pop suppliers that work with glass bottles which are meant to be used and then returned, washed, and refilled for the next customers.

Major beverage suppliers have long switched to single-use beverage containers, which are meant to be recycled but not reused in its same form. However, recently Coca-Cola announced that it would have a quarter of its drinks sold globally in refillable packaging by the end of the decade. Outside the US, the company is also on the way to this goal by using its “universal” plastic bottles designed to be reused by Coke, Fanta, and other Coca-Cola beverage brands after cleaning and the application of a new label.

Reusable plastic bottles don’t have the same long life of glass bottles which can be reused five times before being melted down to make new glass bottles. However, the light weight and unbreakability of reusable plastic bottles has other advantages for sustainability of good customer experience.

The challenge is making sure the needed infrastructure is in place to collect, store, track, and wash resuable bottles or other containers. As TerraCycle’s Loop program and others expand and proliferate, that infrastructure will be more readily available with perfected processes.

Of course, regulations will play a key role in developing a functional resuable container program again…from bans of single-use packaging types to extended producer responsibility plans to container deposit mandates. Of course, increasing attention from investors who are holding companies to verifiable sustainability targets will provide another layer of pressure. In the end, there needs to be a business case for these programs to spread more widely, with cost advantages and consumer preferences making the move undeniable.

Ultimately, previous generations lived in a less disposable world…it can happen again.

Freedonia analysts will continue to monitor these trends in consumer preferences, governmental regulations, and business sustainability goals and targets as well as the variety of other factors that impact packaging trends.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Packaging area. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Packaging    

Wood You Believe It? Lumber Prices on the Rise Yet Again

The cost of lumber in the US reached its peak in mid-2021, as a misreading by lumberyards and homebuilders of the impact of COVID-19 on consumer behavior led to a shortage of lumber and prices triple those seen in early 2020. The situation was exacerbated by COVID-related supply chain issues and tariffs on softwood lumber imports from Canada. This greatly increased the cost of new home construction (around $36,000 per home, according to the National Association of Home Builders) and home renovation projects, which became especially popular among the vast amount of households stuck at home during the pandemic.

Lumber costs finally fell in the summer of 2021, as DIY-inclined homeowners grew fed up with sky-high lumber costs and postponed their renovation projects. While lumber costs remained well above pre-pandemic levels, there was some sentiment that the market had stabilized enough to avoid further short-term price spikes.

Well, that lasted a few months. In 2022, lumber prices are again shooting up, and as of February 17, are nearly three times the levels seen as recently as August 2021. This latest jump on the trampoline is caused by a variety of factors, such as:

  • the November decision by the US Commerce Department to double its tariffs on Canadian softwood lumber imports to nearly 18%, despite the inability of domestic sawmills to meet US demand
  • damage caused to Canadian forests by a plague of mountain pine beetles and a strong wildfire season
  • labor shortages for sawmills that contribute to output lagging new home demand
  • broader inflationary pressures impacting operating costs

Are there reasons to believe that lumber prices will regress in the near-term? A receding of the Omicron wave could help ease labor and supply chain issues. Additionally, the Commerce Department could ease its tariffs on Canadian softwood lumber imports (as it did in 2020), which run contrary to both President Biden’s trade policy criticisms while running for president and his administration’s affordable housing goals. Lumber demand, in the meantime, will remain high.

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.


Rising Prices & Supply Challenges…Consumers Are Stockpiling like it’s 2020

Consumers are nervous…still, and again.

  • This week’s release of the newest inflation figures show fast price increases, particularly in things people buy on a regular basis or otherwise consider very important.
  • “Freedom Convoy” protests -- in addition to winter storms and ongoing international shipping issues or labor challenges -- are becoming part of our concerns about shortages and delayed access to goods.

As a result, more consumers are stockpiling like it is 2020.

The October-November 2021 edition of the Freedonia Group National Online Consumer Survey includes the following insights:

  • Regarding rising prices – the highest share of consumers reporting they were either very or somewhat concerned about rising prices were in these categories: food (90%), personal care products (80%), over-the-counter medications (79%), beverages (77%), cleaning supplies (77%), and parts to repair a car (74%).
  • Regarding shortages – the highest share of consumers reporting they were either very or somewhat concerned about shortages were in these categories: food (82%), over-the-counter medications (69%), personal care products (68%), cleaning supplies (67%), beverages (65%), and parts to repair a car (63%).
  • Between 20% and 25% of respondents reported that they were currently stockpiling and planning to continue stockpiling the following categories of products for the foreseeable future: toilet paper, household disinfecting cleaners, household disinfecting wipes, hand sanitizer, soap, canned foods, frozen foods, snacks, rice, and pasta.

Freedonia analysts will continue to monitor these trends in consumer behavior as well as the variety of challenges the economy faces that gives rise to these feelings.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Consumer Goods and Packaging areas. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Packaging    

What Freedonia Analysts Are Chatting About…

Freedonia analysts participate in a group chat where they share news, notes, and commentary of general interest... or things that entertain us. Sometimes, we are just sharing links. Other times, the links spark conversation. Below are excerpts from a few of those recent conversations:

“This has been a store-within-a-store extension recently... they are going more the way of Tractor Supply with this (pet & home supplies in one place) concentrating more on the home/decor/consumer angle and leaving more of the contractor/professional side to Home Depot. You can see that in the look/style of the stores too.”

“Tractor Supply is big in our area and we get a ton of ads for their pet products.

“Another recent store-within-a-store example is Sephora in Kohl’s.”

“Interesting! But stores have to be careful not to get too cluttered.”

“What happens when there is a store-within-a-store-within-a-store?... META

“Who will pay for it?”

“I think the technology started in the electric/hybrid bus industry. There was a lot of innovative charging technologies being developed for transit buses over the last 5 years or so. A few years ago, scientists in the Netherlands also had an idea of incorporating light and screens into the road to broadcast warnings to motorists that are driving. Interesting that people are rethinking something as simple as the road.”

“They have those electric roadways that charge EVs in Sweden. It seems much more feasible in a country that small.”

“Does it matter that Sweden’s roads are colder? Would a desert area be able to use them?”

“Trivia: roads in Las Vegas can reach 160 degrees”

“Hahaha ‘energy crisis’… wait, my cup is empty now too – more coffee!”

“Might hurry along the BYOC trend again... sell the beverage, not the cup!”

“I think some people are still squeamish about handling others' stuff (maybe especially something like a cup)”

They had a process for it pre-pandemic... I'm sure they can do it again.”

Starbucks has had its reusable cup discount back in place since June. ‘Starbucks held extensive trials and has adopted this new process, using a ceramic mug to transport the reusable cup through the bar, in EMEA and Asia Pacific to reintroduce reusable cups with confidence. Only clean cups will be accepted.’”

“Is the trucker protest in Canada going to cause a lot of trouble as the shipping containers parked out at sea?  I know that it's not nearly as expansive an event as the ships, but…”

“The bridge carries 30% of all truck trade between the US and Canada, so I think there will be pushes from both sides to cut this as short as possible.”

“See this? ‘New Zealand police arrest Covid protesters as 'freedom convoys' spread’ Some countries are already cracking down.”

“It may, if it persists or spreads. They are rerouting trucks north to a different bridge, but there is a 17 mile backup at this point.”

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.


Russian Aggression Toward Ukraine Threatens Metal Supply Chain Issues

As Russia continues to amass troops near its border with Ukraine, the rest of the world waits to see if there will be aggression or a step back. NATO powers have been united in their condemnation of the aggression (though not in the level of material support) and vow to implement crushing sanctions if Russia does follow through with the invasion. 

The economic impact of a renewed war between Russia and Ukraine would be profound, impacting everything from commodity prices and a global supply chain already fraught with issues. The manufacturing sector, for instance, could face serious repercussions from the conflict and “mother of all sanctions” that the US has promised would follow given Russia’s position as a prominent exporter of metals

As Russia is the leading global exporter of nickel and palladium (and is also a major supplier of aluminum, platinum, steel, and copper), these sanctions would have broad effects on a number of industries:

  • automobile production, as palladium is a key component of catalytic converters, copper is used in radiators and electric vehicle production, and aluminum is used in engines
  • electronics, as nickel, aluminum, and copper are used in medical equipment, power generation, mobile phones, kitchenware, and other consumer electronics, which have been in especially high demand following the pandemic
  • industrial equipment manufacturing, which uses platinum
  • others that are extensive users of aluminum, such as can and airplane manufacturers

This is not to mention the supply chain issues that would arise from price spikes related to energy and food, which would also follow an invasion of Ukraine. While NATO has refused Russia’s demand to stop expansion into Eastern countries, it is important to remember that it is not yet a certainty that there will be conflict. 

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Industrial Components, Machinery & Equipment, Automotive & Transport, and Construction & Building Products. Freedonia Custom Research is also available for questions requiring tailored market intelligence.