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.

Rebounding Timber Prices May Lead to Reduced Lumber Prices

A recent article reporting on higher prices for harvested timber in the US reveals an interesting paradox: this increase in timber prices may actually lead to a decrease in lumber prices.

How, one wonders, is this the case?

Well, for some time low timber prices have discouraged owners of forestland from harvesting trees, as they would gain little, if any, profit. This has kept supplies of material to sawmills at a depressed level, making it more difficult for lumber producers to obtain necessary raw materials.

A rise in timber prices, though, will encourage foresters to increase tree harvesting. While there are many uses for harvested timber – corrugated material for the boxes increasingly being used to ship products to consumers a key example – a good share of this newly harvested timber will make its way to sawmills for processing into lumber. Blessed with the prospect of more regular supply, sawmills will expand production activities, thus boosting the amount of lumber available to home builders, contractors, other construction professionals, and homeowners engaged in their own DIY projects. For those who have been dealing with high lumber prices, any relief will be welcome!

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Increasing Multifamily Construction in 2022 a Boon to Housing Industry

The US continues to face a shortage of housing units, as evinced by strong housing prices and a lack of homes available for purchase on the market. However, the US also faces a shortage of multifamily housing (apartments and condominiums). These residences are equally important to the US housing market, as they provide homes for those unable or unwilling to purchase single-family residences. This cohort includes those with small households such as single people and empty-nesters, as well as retirees and others who prefer maintenance-free living. Furthermore, multifamily housing is often more affordable than single-family residences – an important consideration for those still struggling with the economic effects of the COVID-19 pandemic.

Therefore, a recent report stating that 2022 would be a strong one for multifamily housing is welcome news to the US housing industry. Increasing rents and rising property values make apartment construction a viable investment opportunity for firms looking for strong returns, while continuing demand for apartments and condominiums will encourage the construction of new complexes and the refurbishment of existing facilities. Many of these multifamily housing units will be located in urban areas, thus easing the shortage of affordable housing so often prevalent in many cities.

Increasing construction of multifamily housing units will also boost demand for a wide range of construction materials, key among them:

  • cement and concrete – used not only for the structures themselves, but also related facilities, such as parking garages
  • windows and doors
  • lumber – especially for prefabricated roof, wall, and floor trusses
  • drywall
  • plumbing fixtures and fittings
  • insulation

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Off-Premises Dining: The New Normal

Prior to the COVID-19 pandemic, the idea that a restaurant (save for the fast-food segment) would devote serious resources to expanding its operations in the take-out sector would be treated with derision. Why, after all, would a restaurant operator choose to sacrifice valuables in appetizers, beverages (particularly potent potables) and dessert? However, the COVID-19 has dramatically changed how the restaurant industry looks at carry-out: 

  • Many consumers are leery of eating in a restaurant (as of the June 2021 edition of the Freedonia Group National Online Consumer Survey, 52% of respondents still noted that they were eating less often indoors in restaurants because of the pandemic), but still desire their favorite dishes from local eateries.
  • A number of states and localities have loosened liquor laws, allowing the to-go sale of alcoholic beverages – thus reserving a source of revenue for many casual restaurants.
  • While dining apps (e.g., UberEats, DoorDash, and Grubhub) have become increasingly popular (as of the June 2021 edition of The Freedonia Group National Online Consumer Survey, 27% of respondents noted that they were ordering a meal from a restaurant via a 3rd party app more because of the pandemic), the fees they charge can add greatly to the cost of a meal.
  • Restaurants have expanded curbside delivery as a way to recapture market share (as of the June 2021 edition of The Freedonia Group National Online Consumer Survey, 34% of respondents noted that they were ordering carry-out from a restaurant more often because of the pandemic).

A number of restaurant chains have announced plans to expand curbside delivery options, refurbish restaurants to exclusively cater to drive-through customers, or launch new operations specializing in pickup and delivery. In most cases, this involved adding kitchen capacity dedicated to carry-out and delivery orders as kitchens were not equipped to handle off-premises orders along with a busy period of on-site dining. However, the space near the entrance meant for greeting and seating diners was not enough to also accommodate delivery and carry-out operations.

Thus, the recent news by TGI Friday’s that they would be developing a small format restaurant devoted to curbside and off-site delivery was of interest. Given the chain’s reputation as a leading casual sit-down restaurant, this entrance into the world of off-site dining can be interpreted to indicate that this will be a permanent change to US dining habits – even after the threat of the pandemic recedes.

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.

  Covid-19      Food & Beverage      Services    

Closed Loop Manufacturing vs. “Downcycling”…How Should We Best Use Recycled Materials?

Closed loop manufacturing is often prioritized and seen as the gold standard in sustainability. This process bring waste back into where it came from so that waste products return to make the product again and ultimately nothing (or almost nothing) is really wasted. However, there are limits to recyclability without losing performance – strength, flexibility, etc.

Perhaps recycled content has more environmental impact if used in a new way. For instance, recycled plastic bottles, bags, and film can also be made into things like pipe, decking, fencing, furniture, and fleece; and recycled glass containers can be used in the cement manufacturing process and to make countertops. This is often called “downcycling” as the materials are used to make something else rather than to make more of what it was. The process had gotten a bit of a bad rap as closing the loop held our fascination…but is that correct?

Is there greater impact on protecting limited resources and reducing greenhouse gas emissions if recycled content (plastic and otherwise) is used to “green up” a long-lived product like construction materials instead of in something that has a limited lifespan and can be made more sustainable in other ways (e.g., packaging)?

This is the argument in policy circles as they consider recycled content mandates or extended producer responsibility (EPR) programs. If there is a finite amount of PCR (post-consumer recycled content) – and there is – what is the best use of it?

The goal of both is ultimately to incentivize bringing more waste into recycling streams so that more materials are available for reuse and kept out of landfills. But sustainability is multilayers…reduce what you can…reuse what can’t be reduced…recycle what can’t be reduced or reused.

In the end, this might be why there is an increasing trend toward EPR. These programs allow for more flexibility in making sure the recycled content use is optimized and companies are still incentivized to reduce material use overall as well.

Freedonia analysts continue to examine ways various industries are maximizing their resources and minimizing their waste, while keeping in mind current limitations on available recycled content and trends in municipal and private waste management along with consumer participation.  

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Packaging, Construction, and Consumer Goods catalogs, with analysis covering Recycled Plastics in Packaging, Decking, Plastic Pipe, Fencing, Countertops, Global Cement, and more. Freedonia Custom Research is also available for questions requiring tailored market intelligence.


Our Pandemic Habits…and the Smells in Our Homes

Did you get a pet? Did your gym routine move to your family room? Did you start cooking more, including fish? Did your work-at-home habits downgrade your self-care? Does your home smell like it?

More and more people are concerned about this, especially as higher rates of vaccinations and booster doses have many of us more comfortable bringing friends and family back into our homes for visits.

Consumers increasingly sought out air cleaners and ventilation systems to improve our indoor air quality in recent years. Earlier adopters of home air treatment systems were often seeking a way to help with allergies, from dust to pet dander, which often build up in our homes. Others added the systems out of concern about volatile organic chemicals off-gassing from materials (e.g., carpets, paint, glues) used in our homes. More recently, we sought treatments from high-tech (HEPA filters) to low-tech (mechanical ventilation and opening windows) to make our homes and businesses healthier and safer in a COVID era.

But what about the smells? Many air treatment systems include carbon filters to help with odor removal, but they work best if the system is sized for the room it is in. Additionally, anything that allows air exchange – whether fresh from outdoors or from moving through an air cleaning system – will help with odor removal.

Of course, tackling odors at the source are still important…and industries are looking for opportunities there as well. For example, kitty litter that doesn’t have the kitty litter smell, wipes for in between the dog’s bath, sprays and detergent to tackle laundry smells, and candles and sprays from light and natural to perfumed exist or are entering the market to help us out.

But still, don’t forget to go outside…and open that window when you can!

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in Construction and Consumer Goods catalogs, with analysis covering Indoor Air Quality Equipment, Global Residential HVAC, and more. Freedonia Custom Research is also available for questions requiring tailored market intelligence.