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.

Face Masks: Production Shortages & Export Restrictions

On Thursday April 2, the Trump administration invoked the Defense Production Act requiring 3M to prioritize sales of its face masks to the US Federal Emergency Management Agency over other customers.

Before the COVID-19 crisis, 90% of 3M’s N95 mask capacity had been going to industrial customers. However, the CEO of 3M has already noted that the company has shifted sales so that 80% of its US sales now go to healthcare facilities in the hardest-hit areas, while the other 20% go to federal agencies such as FEMA. The concerns were that 3M – which sells US-made masks to Canada, Mexico, and Latin America (including countries where it is the sole supplier of N95 masks) – would not be able to fulfill the needs of domestic and global customers. However, restricting supply to other countries may lead to retaliation and shortages in these or other areas.

The US is only responsible for about 30% of the global production of medical disposable equipment in value terms. While the US is, overall, a net exporter of these products, that status does not hold across all individual product categories. Particularly in a time of crisis, the US must cooperate with all markets within global industries, which is part of what could make the demand that 3M reappropriate its existing and expanding capacity deeply problematic. Canada, which buys US-made face masks from 3M, is a key supplier of wood pulp, a primary material used to make N95 face masks as well as test kits and gloves. Global supply chains demand cooperation to function smoothly.

As of Sunday April 5, Canada’s Prime Minister Justin Trudeau did not yet have plans to retaliate and expressed hope that the supply situation could be addressed through diplomatic channels instead.  

For more information, see The Freedonia Group’s US Disposable Medical Supplies, Global Disposable Medical Supplies, Global Nonwovens reports. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19      Textiles & Nonwovens    

US Home Building Declared Essential by Department of Homeland Security

Building and construction professionals across the nation were cheered by the recent decision by the Department of Homeland Security (DHS) that home building was an “essential” business. While individual state and local authorities can issue regulations more closely defining what is an essential business, the inclusion of home builders by the DHS in its list of essential industries means that – in many jurisdictions – the erection of new single-family and multifamily housing units can continue.

This declaration underscores the importance – even in a time of pandemic – of the home building industry to the US economy. In addition to the millions of jobs the industry provides, the US faces a lack of affordable housing, something which can only be remediated by the construction of new homes and apartments. Integral to the recovery of the US economy after the COVID-19 pandemic subsides will be the addition of new and affordable to nation’s housing stock.

While construction of new homes will continue in many parts of the US, state and local governments across the country are working to limit the spread of coronavirus on job sites by requiring:

  • social distancing between workers
  • limited numbers of subcontractors on a job site at any given time
  • periodic temperature checks of workers
  • frequent cleaning and sterilization of tools and equipment

For more information about the US home building industry, see The Freedonia Group’s coverage of the Construction and Building Products industries.

Expanding Range of Manufacturers Declared “Essential” Shows Importance of Construction Industry to Nation

April 2, 2020 - The US Department of Homeland Security issued revised guidelines as to which firms could be considered “essential” and thus could remain in operation during the COVID-19 pandemic. Among the firms specified by the DHS were those involved in the production of:

  • cabinets
  • windows and doors
  • plumbing products
  • heating, ventilation, and air conditioning (HVAC) equipment
  • paints and coatings
  • store fixtures
  • appliances

This revised guidance as to what is considered to be essential demonstrates the continuing importance of the nation’s construction industry, even in times of crisis. The US faces a shortage of affordable housing units and – in many areas – will require additional medical facilities to treat those affected by COVID-19 and other ailments.

By declaring that firms manufacturing those items used in homes, medical facilities, and other structures, the US is signaling its commitment to ensuring that the US will not only continue to fight coronavirus but also to ensure that the economy – once the pandemic ends – can return to normal as quickly as possible.

For more information about the US cabinets, windows and doors, plumbing, HVAC equipment, appliances, and paints and coatings industry, see The Freedonia Group’s coverage of the Construction and Building Products industries.

Despite Pet Industry’s Strengths, 17% Sales Drop Projected for 2020

The pet industry is famously recession resistant, coming through both the September 11, 2001, attacks and the Great Recession of 2008-09 relatively unscathed. However, not even the new “pet parent” sensibility can make the pet industry recession-proof in the midst of the novel coronavirus pandemic. 

In its just-published U.S. Pet Market Outlook 2020-2021, market research firm Package Facts forecasts that total U.S. retail sales of pet products and services will decline by 17% in 2020, compared with the 5% growth anticipated prior to the coronavirus pandemic. The firm projects a substantial, though partial, rebound in 2021 that will stem from the underlying strength of the pet industry.

The U.S. pet industry is coming off a strong performance in 2019, with overall sales of products and services rising 5.4% despite the maturity and impressive scope of the pet industry.

For more information, see the rest of the pet industry coverage from our sister publisher, Packaged Facts.

  Consumer Goods      Covid-19    

Pet Ownership in Challenging Times & the Effect on Pet Industry Sales

Increased ownership rates for dogs, a pattern evident in the wake of the Great Recession, “might help soften the blow of pet industry losses,” according to David Sprinkle, research director for Packaged Facts, “and in the long term, losses aren’t characteristic to the U.S. pet market.”

Ownership (and adoption from pet shelters) of the most companionable and pettable pets may get a boost among a national population that is now largely isolated, staying at home, and well aware of the mental and physical health benefits of pet ownership.

New pet parents tend to be key buyers of pet products as they look to accommodate an expansion of their pet family or to make their home suitable for their first pet. Pet industry businesses can partner with pet shelters and rescue groups to highlight the ongoing need for homes for these animals and the companionship benefits they have for homebound people.

For more information, see Pet Market Outlook 2020-2021 along with the rest of the pet industry coverage from our sister publisher, Packaged Facts.

  Consumer Goods      Covid-19