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.

Strong Home Prices to Provide Incentive to Home Builders to Maintain Production

Consumers are increasingly getting used to higher prices for a number of products, such as toilet paper and meat, due to supply shortages. This recent Wall Street Journal article indicates that shoppers for a pricier product – a home – will also be confronted with rising prices for the same reason: a lack of homes on the market that are available to purchase.

This shortage of homes presents an opportunity to the nation’s homebuilders, many of whom have been buffeted by shutdowns (in some states) and worker safety requirements – such as social distancing and the need to more frequently sterilize equipment – that have added to the time and expense of homebuilding. While new homebuilding is expected to decline in 2020 – especially in the second quarter of the year – it is anticipated that this market will rebound in 2021 and beyond. Indeed, if home prices remain high, builders may ramp up production to maximize profitability – an especially important consideration for firms that saw sales declines in 2020.

For detailed information about the effects of the COVID-19 pandemic, see The Freedonia Group’s:

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

Packaging Values: Sustainability vs. Hygiene?

Plastic and single-use packaging, in general, hit its stride in part by suggesting that it was cleaner and more hygienic than paper or reusable options. However, as time has gone on, these benefits have taken a back seat to concerns about resource use and trash generation, which have caused many to question the dominance of single-use packaging.

With the onset of the COVID-19 pandemic, arguments for the superior hygiene benefits of single-use packaging are making a resurgence. This has been most notable  in the suspension of single-use bag bans in much of the US. For instance, California suspended the charge for single-use plastic retail bags for 60 days. Many retailers have reverted to single-use bags, arguing that bags brought from a consumer’s home may be contaminated with the COVID-19 virus and put their employees at risk.

However, California’s Division of Occupational Safety & Health recommends that stores ask consumers to bag their own purchases as a response to concerns about contaminated bags. This can be done either in a designated bagging space, if the store has one, or at their own cars.

Although there is a fair bit of debate about how long the virus lasts on various surfaces – including plastic bags, paper bags, and textile bags – most seem to agree that the biggest hygiene challenge to retailers is person-to-person contact. As such, wearing masks, using shields and touch-free payment systems, and frequent hand washing are still the best solutions to preventing spread.

The long-term challenge is what the renewed availability of free plastic shopping bags will do to consumer habits, which had begun tilting toward reusable bags following years of phase in of different regulations.

For more information, see The Freedonia Group’s catalog of packaging research, including Retail Bags, and Global Single-Use Plastic Packaging Regulations as well as research from our sister publisher, Packaged Facts, covering the food and beverage industry. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Packaging    

Packaging Values: Sustainability in a Shelter-in-Place World

Consumers who stocked up their pantries to ahead of the stay-at-home orders or to reduce their shopping trips found themselves with more packaging than they normally have. Even consumers who have been trying to reduce their waste footprint are stocking their homes with canned food and food ensconced in layers of plastic and paperboard, waxed or otherwise. Households are also inundated with countless boxes from increased e-commerce deliveries.

Must sustainability be sacrificed to extended food shelf life?

Must sustainability fall victim to our need for delivery as we reduce in-person shopping?

Are these truly either/or situations?

Must consumers and packaged food companies choose between their sustainability values and the needs of our current situation in a world still largely sheltering in place?

There are answers to these questions. With some creativity and continued dedication to systemic change, packaging firms and consumer packaged goods companies can still answer both needs:

  • Amazon continues to move vendors toward frustration-free packaging and e-commerce ready packaging that can be shipped as-is and does not need to be placed inside another box or mailer.
  • Innovative types of film can be used to better protect the food inside.
  • Single-material packaging is better positioned for recyclability.

The problem for sustainably minded consumers is that their options aren’t as widespread as they should be and the available options are still too often priced for better off consumers.

A functioning waste infrastructure – including municipal composting facilities and recycling capacity that covers a more diverse array of materials and forms – is also needed. Such a public investment would pay off in reduced landfill and a more circular economy.

For more information, see The Freedonia Group’s catalog of packaging research, including Food & Beverage Packaging Innovation and Global E-Commerce Packaging, as well as our sister publisher Packaged Facts’ food and beverage industry research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Covid-19      Packaging    

Sustainability: What Is the Long-Term Effect of this Pause on Greener Business Practices?

Companies have pressed pause on  their greener business practices for a number of reasons. For instance, Starbucks eliminated its program that allowed customers to bring their own reusable cups for hygiene purposes, and General Motors ended its car sharing and long-term rental programs because many people have been sheltering at home rather than traveling or commuting.

Recessionary economic conditions have companies tightening their belts as revenue has been sharply reduced and uncertainty remains as to how long that will last. The challenge for companies – big and small – will be to spend strategically, where it is needed, to ensure that long-term goals are not side tracked. Executives such as General Electric’s CEO Larry Culp noted in an interview with CNBC, “We don’t want to spend one dollar more than we need to this year, all the while making sure we don’t shortchange the long term.”

Sustainability focused investor groups understand the complexity of the current situation but are continuing to watch and report on what companies are saying and doing with regard to their sustainability pledges.

It’s worth understanding that sustainability is still a business opportunity. If people come out of the crisis living and working differently (e.g., online school, increased online shopping, more work from home, video conferences over in-person business travel, virtual trade shows, greater concerns about complex international supply chains), how can businesses respond in a way that reduces waste and energy usage? Packaging and power supplies are significant costs in many businesses.

BP is one such company that is keeping its eye toward that future. BP Chief Executive Bernard Looney noted in a recent conference call that the long-term outlook for the company must be an ongoing turn toward renewable options. He said, “The pandemic I think only adds to the challenge for oil in the future.”

For more information, see The Freedonia Group’s extensive catalog of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Once Promising Home Improvement Market Threatened by COVID-19 Pandemic

2020 was supposed to be a good year for the home improvement market as low unemployment, wage growth, and rising property values were set to encourage thousands of homeowners to undertake significant renovation projects – remodeling kitchens, adding bathrooms, replacing roofing or siding, or installing new flooring. Instead, the home improvement industry faces a period of decline due to the COVID-19 pandemic.

As indicated by a number of reports, home remodeling spending in the US expected to decline throughout the rest of 2020 and into the first part of 2021. While construction has been classified as an “essential” business by both the US Department of Homeland Security and by the majority of state governors across the US, the home remodeling industry will still face a number of challenges going forward that will limit sales opportunities, such as:

  • homeowners dealing with unemployment (even if temporarily) and thus unable to invest in home renovations
  • consumers more broadly concerned about their future economic well-being and thus putting off home improvement projects
  • homeowners unwilling to let people into their homes to make estimates due to concerns about spreading coronavirus
  • slowdowns in the pace of work due to social distancing on job sites and other mandates (such as those regarding cleaning equipment) that add to the time needed to complete a job
  • potential shortages of building materials as suppliers adjust operations in the face of reduced demand
  • delays in the shipment of ordered materials due to a shortage of truckers carrying materials or logjams in ports