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.

Trio of Articles Indicate Continuing Uncertainties in Home Remodeling Market

Three articles – published within days of each other – each had a slightly different take on the effects of the COVID-19 pandemic is having on the home remodeling market:

  • One article indicated that dealers and contractors in the kitchen and bathroom remodeling industry were seeing the effects of the coronavirus pandemic lessen as more consumers expressed an interest in these projects.
  • Another article stated that home renovation activity fell sharply between March and April of 2020 as consumers cancelled many projects in the wake of the coronavirus outbreak.
  • Finally, a report which that while many homeowners had put off home renovations because of the pandemic, they expected to undertake home repairs going forward.

The home remodeling market – as the above articles indicate – is in a great deal of flux right now. On the one hand, states are “re-opening” and consumer spending is increasing, and some of that will spill over into the construction market. Others, noting that unemployment and financial uncertainty remain high, expect only marginal improvement in the home improvement segment.

The Freedonia Group predicts that construction spending – including that of the home improvement market – will contract in 2020 but will post rebounds in 2021 and the years beyond as the economy improves and more consumers feel confident enough in their own finances to invest in their residences.

For more information, see The Freedonia Group’s collection of research and analysis on construction and building product industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

Frozen Foods Are Hot Right Now… So Are Canned Foods

There are a few key factors behind the rise in frozen and canned food sales:

  • Comfort Foods. 58% of respondents in the new Freedonia Group National Online Consumer Survey noted that they are buying more comfort foods because of the coronavirus pandemic.
  • Stocking Up. This is trend is largely done – as seen in the big decline in April grocery sales compared to those in March – but replenishing will continue as long as we’re eating primarily at home.
  • Easy Meal Prep. If, like me, you’re prepping family meals three times per day, you’re looking for quick options. 
  • Feeding Picky Kids. Parents are not interested in battling food choice right now, so they are offering more foods that they are confident their children will eat.

However, despite the general negative perception of frozen and canned foods as full of preservatives, salts, and other unhealthy ingredients, there are canned and frozen items that do not count as processed foods or that are minimally processed. Such products as frozen vegetables, frozen chicken breasts, canned beans, canned vegetables, canned fruit without syrup all do not automatically count as unhealthy eating simply because of their formats. They do provide short-cuts, but they aren’t necessarily unhealthy. These versions will just last longer than their fresh cousins. Canned versions are also shelf-stable, saving precious refrigerator space for other food items.

Fighting against the perception of canned and frozen foods as highly processed food is a distinction that packaged food companies will want to make when possible. Only 36% of respondents in The Freedonia Group proprietary survey noted that they were buying more processed food because of the coronavirus, and only 29% reported that they were reducing their purchases of fresh produce.

For more information, see The Freedonia Group’s coverage of the packaging industry and analysis of the food and beverage industry from our sister publisher, Packaged Facts.

  Consumer Goods      Covid-19      Food & Beverage    

Near Sourcing & Rebuilding Local Stockpiles of Critical PPEs Will Require Support

Near sourcing is a trend that will change the supply chains for medical masks, critical personal protective equipment (PPE), and the materials needed to make them.

Governments and industry are seeing the value of following the model common in hygiene nonwovens markets, producing the nonwovens close to the converters and placing converters closer to where the masks and other critical PPE will be needed. This serves as a hedge against future pandemics or similar supply chain disruptions. 

As more companies adopt near sourcing tactics, they will place a certain amount of upward pressure on global average prices for these goods. More suppliers will set up production capacity in places like North America and Europe, which lack China’s cost advantages in economies of scale and low labor costs. A combination of strategies such as a push toward greater automation in production or government subsidies will be needed to support these higher-cost producers if near sourcing is to remain a priority.

Don & Low’s recent investment in meltblown production capacity in Forfars, Scotland, is one such example. The company reportedly received 80% of the cost to acquire and install the new line from the Scottish government. This capacity will make the company one of only a few companies in Europe that can make the material needed for respirator masks. The government saw value in having local capacity to produce PPE for healthcare and other frontline workers.

For more information, see The Freedonia Group’s coverage of the textile and nonwovens industries, including a new COVID-19 Impact Analysis report for Global Disposable Masks & Respirators.

  Consumer Goods      Covid-19      Textiles & Nonwovens    

COVID-19 Pandemic Plays Large Role in Driving Up Lumber Prices

Much as drivers are seeing prices rise for gasoline, so too are construction professionals seeing price hikes for one of the key materials of their trade – lumber.

The COVID-19 pandemic has played a key role in causing this increase in pricing. Construction projects in many parts of the US were slowed as states adopted work rules – such as social distancing – that added to the time needed to complete jobs. In other states, nearly all construction was halted as governors declared much building activity to be nonessential. In consequence, a number of lumber producers have temporarily or permanently ceased operations, reducing lumber supplies as fewer homes were completed and renovation activity fell off.

At the same time, large numbers of US consumers suddenly found themselves at home for extended periods of time, providing ample opportunity to complete those tasks – including home repairs and maintenance. As indicated by the most recent data, building materials suppliers and distributors saw solid sales growth in April. While some of this was due to seasonality and construction professionals stockpiling materials for future use, sales were supported by homeowners engaging in DIY projects, such as building decks and fences, renovating rooms, and installing shelving.

Going forward, it is expected that lumber prices will continue to rise as housing starts rebound and consumers feel more confident in undertaking large-scale home improvements – such as kitchen and bathroom renovations – that have historically most often been done by professional contractors. However, the DIY segment will continue to play a role in building construction, which will further boost lumber pricing and lumber production going forward.

For more information, see The Freedonia Group’s collection of research and analysis on construction and building product industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

From Corrugated Packaging & Displays to Social Distancing Supports

Smurfit Kappa has introduced its Safe Portfolio line of desk dividers, standing workspace dividers, retail screens, and signage to communicate safe spacing. These products are designed as alternatives to plastic dividers. Although not intended for extended use, these products feature a varnish coating so that they can be cleaned with alcohol-based cleaners.  

Key advantages of using corrugated materials include their low cost, light weight, and recyclability. The material also accepts printing for additional customization, including branding, safety information, or other instructions. Corrugated products are also able to be made with a high level of post-consumer or post-industrial recycled content, boosting the environmental profile of items made from it. Studies also indicate that COVID-19 has a shorter lifespan on corrugated compared to smoother materials such as plastic and steel.

Companies around the world and across industries are looking for ways to pivot into the current challenge, seeking opportunities to repurpose what they  do to solve these new problems. Here is a company that is literally thinking outside the box.

For more information, see The Freedonia Group’s coverage of the packaging industry, including Global Corrugated Boxes (and a companion COVID-19 Economic Impact Report on the industry) and US Retail-Ready Packaging, as well as COVID-19 Impact Analysis reports on safety products such as Global Disposable Masks & Respirators, Global Disposable Medical Gloves, and Global Industrial & Institutional (I&I) Disinfectants & Sanitizers.

  Covid-19      Packaging