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.

North American Truck Sales Hit Unprecedented Lows

A softening of truck orders in 2019 – which followed a record spike in 2018, when the strength of the US economy and changes to business taxes encouraged equipment investment – has now been compounded by the COVID-19 pandemic in 2020. While orders increased in January 2020, orders began to fall again in February until they unprecedented lows in April at just 4,000 vehicles, according to an article published by the Wall Street Journal. Most traditional markets for trucks have experienced severe turmoil since March, causing a dramatic decline in orders for the models needed to transport materials and goods.

The COVID 19 pandemic has caused weakness throughout much of the North American economy, and fewer trucks are needed on the road right now as there are fewer goods being produced and distributed. Even as states reopen manufacturing plants and employees return to work, the uncertainty regarding how long the economy will be depressed will likely reduce order rates in the coming months as well.

Further complicating matters, it is not clear how many existing orders for heavy trucks in North America will be cancelled in coming months as companies go out of business and others reduce production and delay plant openings.

While 2020 is shaping up to be a year or record lows, the North American heavy truck industry will increasingly look to 2021 and beyond for new opportunities as it weathers the COVID-19 pandemic.

For more information, see The Freedonia Group’s Global Diesel Engines and North American Medium- and Heavy-Duty Truck Aftermarket studies as well as our Medium- & Heavy-Duty Trucks & Buses: United States and Global Medium- & Heavy-Duty Trucks & Buses Freedonia Focus reports. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Covid-19    

US Flooring Market Cautiously Optimistic in Face of COVID-19

US manufacturers of flooring are beginning to restart production and boost operations as a number of states loosen restrictions on commercial activity. Many flooring producers were optimistic about 2020 before the pandemic, as a strong housing market and a high level of consumer interest in home improvement projects was expected spur demand for flooring materials.

While the housing market is expected to see declines in 2020 due to the COVID-19 pandemic, the US flooring industry is still confident that sales – while not as high as were originally projected – will not fall dramatically. US flooring manufacturers are anticipating sales to be supported by factors such as:

  • the nation’s shortage of affordable housing – home builders will continue to erect new homes to meet demand for housing
  • remodeling interest among some homeowners – especially those sheltering in place for weeks and looking to improve the appearance or functionality of their homes
  • the continuing popularity of hard-surface flooring that can be installed by do-it-yourself consumers, such as luxury vinyl tile, decorative tile, and laminate and hardwood flooring
  • lessened competition from China, the expected continuation of tariffs are compounded by supply disruptions caused by the production limitations that followed stay-at-home orders in Q1 and early Q2

For more information about the US flooring industry industries, see The Freedonia Group’s studies on Global Flooring, Global Carpets & Rugs, and Global Hard-Surface Flooring, as well as its coverage of the Construction and Building Products industry.

Survey Hints at Future Remodeling Projects Due to COVID-19 Pandemic

The large majority of US consumers are spending much more time at home in light of shelter-in-place orders and stay-home recommendations. This, in turn, is causing many people to think about their living spaces. As more people are in the home for longer periods of time, homeowners are considering ways to improve their residences by adding space or enhancing convenience.

This recent study shows that many homeowners are thinking about the best ways to remodel to make their houses more suitable to their post-COVID-19 needs – while bowing to the realities of life during and after the pandemic. These home improvement projects can include:

  • additions or expansions to create more space
  • updating kitchens to accommodate families dining together more frequently or adding amenities that re-center the kitchen as the focal point of family life
  • adding bedrooms or bathrooms to enhance privacy and convenience for family members who may be living in a home temporarily (due to shelter-in-place orders) or permanently (due to job losses)
  • installing a home gym (many states have closed gyms and recreation centers)
  • installing more and larger windows to provide more natural light

While not all homeowners will undertake these “dream” projects, it is expected that some consumers – after several months of remaining at home – will decide that their homes will need an upgrade and will either plan for or embark on one (or more) home improvement projects. Whether performed as a DIY project or through the work of professional contractors, this uptick in home improvements will boost demand for a wide range of building and construction materials.

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.

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