Market Trends June 2021
What Shape Recovery?
A debate is underway about whether the spike in inflation caused by rising prices for everything from groceries to gasoline is a trend or a temporary reaction to accelerated demand and short supply. The rapid reopening of the country has suddenly boosted demand for many services such as airline travel and restaurants that suffered during the pandemic. The Fed has pledged to keep interest rates low for a long period of time in order to guarantee maximum employment. The Fed believes the current rounds of price increases are most likely temporary and should not interfere with spurring employment. Economists note that many spikes in prices are in response to unique situations. The global chip shortage has slowed down production of new vehicles. Rental car companies sold off parts of their fleets during the pandemic due to lack of demand, so there are fewer used cars on the market, and prices are up on both used and new vehicles. The building materials spike has resulted from a pandemic-driven surge in demand coupled with a pandemic-driven drop in labor and exacerbated by tariffs that are still in place as well as the strong Canadian dollar. But as production ramps up, these shortages are expected to ease. Jumps in airfare and hotel room rates are largely a bounce-back from the steep discounts offered during the outbreak. The cyberattack on a major gas pipeline serving the East Coast combined with panic-buying drove supplies down and prices up. The Fed believes that much of this is due to “reopening pains” and that production will soon meet demand, stabilizing prices and providing solid economic growth. If people and businesses panic about inflation and raise prices and wages, inflation will become a self-fulfilling prophecy.
Global and US Spending Boom?
Consumers around the world have amassed an extra $5.4 trillion in savings since the pandemic began, which has set the stage for a spending boom that could lift global economic growth. Households had stockpiled savings equal to 6% of global GDP by the end of March, according to Moody’s Analytics. Those savings are on top of what people would have normally saved. The US boasts the largest share of excess savings, amounting to $2.6 trillion, or 12% of US GDP, with the United Kingdom close behind at 10% of GDP. Many wealthier households have built up savings they would have otherwise spent on travel, entertainment and eating out. Another factor has been unprecedented support by governments committed to making sure workers and companies fiscally survived the pandemic. As lockdowns ease up, consumers are expected to spend about $2 trillion of this surplus cash globally, adding about 2% to global GDP growth. However, in the US those aged 55 and older have more than 60% of the excess savings, with homeowners holding 90% and 75% concentrated in households with at least a college degree. One factor limiting an even bigger spending boom is the fact that high-income households in the US are more likely to treat accumulated savings as “wealth” rather than income, and therefore will spend less of it, at least immediately.
Women Breaking the Concrete Ceiling
Women make up just 10.3% of construction industry jobs, and 2.5% of skilled trade jobs but comprise 47% of all employed US individuals. One out of every 100 employees on the front lines of a job site are women. Today about 87% of women in construction have office jobs. However, the number of woman-owned construction firms is growing rapidly, with women owning 13% of construction companies. The majority of those are small businesses, but 9% have annual revenue of more than $500,000.
Several factors can explain this enormous gender gap, including lack of both opportunity and exposure in school, few trail-blazing role models, lack of adequate training opportunities and both an unconscious and conscious gender bias. However, there are forces at work in the industry bent on changing all that, because the skilled-trades construction worker shortage is expected to get worse. Analysts project that the industry will have an astonishing two million new jobs in 2022.
In the last five years, more companies have been hiring more women and promoting them to leadership roles. More than 40% of the Top 100 contracting companies have women in executive roles. Many large contractors and industry associations are now offering courses and running boot camps for students and interested women at all levels.
A recent McKinsey study found that construction companies with more women in executive line roles outperform the competition. These companies experienced above-average financial performance, and when 30% or more of executive-level positions were filled by women, those companies had a 48% likelihood of outperforming their least-diverse competitors.
Nationally recognized groups like the National Association of Women in Construction (NAWIC) and Women Construction Owners & Executives USA provide mentorship, marketing and networking opportunities to help women who are new to the construction industry.
Women in construction are becoming media stars. ABC’s unscripted competition show, Tough as Nails, produced by the Amazing Race’s Emmy-award winning Phil Keoghan, features men and women with physically tough jobs, many in the skilled trades. Contestants compete both individually and as part of a team, so no one gets voted out. Women made it to the final rounds in both seasons, and repeatedly talked about how they wanted to be role models for girls and other women who perhaps had never thought about the skilled trades. The unexpected hit show has already been renewed for at least two more seasons.
NBC recently profiled a new generation of Rosy the Riveters on the Today Show. During World War II women stepped up into many traditionally male jobs, including welding and construction jobs. But when the war ended, most of them went back home. Today just 4% of welders are women. A nonprofit program started in Detroit in 2014 called Women Who Weld is an intense training program out to change all that; so far they have a perfect track record: 100% of the 400 women who have enrolled have graduated and gone on to land jobs in the industry. The women say the program is very empowering. America has lost some 7 million manufacturing jobs since the 1960s but the need for welders has grown, with salaries sometimes topping $100,000.
Truck Driver Shortage
A truck driver shortage that has been developing over the past ten to fifteen years has been kicked into high gear by the pandemic. Truck drivers can make from $40,000 for a beginning driver to $80,000 and more, but the job is very demanding and drivers can be away from their home and family for weeks at a time. The American Trucking Association estimated that the industry was short at least 60,000 drivers in 2018, and now that shortage is growing. The average age of the existing workforce plays a major role. According to surveys by ATA, nearly 57% of all commercial truck drivers are over 45, and 23% are over 55. That means a quarter of the current trucking workforce will hit retirement age in the next 10 years, not including the nearly 8% of truckers who are currently working above retirement age. Recruiting and training is tough; drivers must be 21 to cross state lines and transport many types of products and many companies have very strict hiring standards due to liability issues. This summer, a chronic shortage of drivers is expected to lead to gasoline shortages and other issues. Industry analysts say that long-term solutions that provide better training and benefits are needed. In addition, warehouses and transportation centers need to be streamlined and optimized to cut down on waiting time and wasted hours and long-haul truck drivers need access to more centers with food, fuel and necessities that can accommodate big rigs.
The Voice-Profiling Revolution
Marketers are on the verge of being able to use AI-assisted vocal analysis technology to do a much better job of profiling customers and meeting their needs, according to the University of Pennsylvania’s Joseph Turow, who just wrote a book on the subject based on his research. People have embraced all manner of voice-activated and responsive devices and many companies now use voice intelligence in their call centers. That means artificial intelligence is gathering enormous amounts of data that helps identify and profile individuals by their speech patterns and even the sound of their voice. When you hear “This call is being recorded for training purposes,” it’s not just the customer service rep who is being monitored.
Voice analysis and targeting is already being used by some companies, and many more believe they will be able to take advantage of these capabilities within the next decade. Because many companies use the same software for customer service calls and calls are all recorded, the software is able to analyze and compare the voice and speaking style someone uses each time they call any of the companies who use the software. The software then creates user-profiles that group people with similar speaking styles. When a call comes in, predictive routing is used to get the call to a customer service rep who has previously been identified as being especially suited to handle people with a similar style and profile. For example, if the caller has been identified as friendly and talkative, they will be paired with a friendly and talkative agent who supposedly will have the best chance of solving their problem or upselling them.
Voice analysis is viewed as more reliable than data profiling for a variety of reasons; it is nearly impossible for someone to purposefully disguise their voice, and bots and trolls have not yet learned to speak like humans. The user agreements we all sign with Amazon, Google, Pandora and many other companies with phone apps give the company the right to use their digital assistants to listen, profile you and understand you based on the way you sound and speak. Many analysts see a dark side to voice analysis, profiling and predictive intelligence and worry that it could be used against someone, to decide you weren’t a good candidate for a job or a loan, for instance.
Amazon introduced a new program called Build It. Amazon will present concepts for devices online and leave it to shoppers to choose whether or not they want something by pre-ordering the item. If a concept hits a set preorder goal within 30 days, Amazon will go ahead and create the device and consumers will receive it at a special price. If it doesn’t meet the goal, Amazon won’t build it and shoppers will not be charged.
Amazon is beginning to roll out their pay-by-palm technology at Whole Foods stores near Amazon headquarters in Seattle where the experiment can be closely monitored. The technology, called Amazon One, lets shoppers scan the palm of their hand and connect it to a credit card or Amazon account. Amazon says the initial set up takes less than a minute. The shopper simply scans their hand at the register. Amazon launched the tech last year and made it available to other businesses, but thus far there have been no takers. Privacy experts warn that biometric data used by companies could be hacked and stolen. Amazon says it keeps the palm images in a very secure part of their cloud and doesn’t store any info on the Amazon One device. Shoppers can ask for their info to be deleted at any time.
Amazon’s Core AI team launched a CV19 forecasting methodology that drove more than $500 million in buying decisions. Amazon told Sourcing Journal at the A14 Retail, Supply Chain and Marketing Summit that over the first six months of the pandemic their new methodology, which they developed in less than two weeks, increased Amazon’s allocation of key products by 40% after the first wave of CV19. Amazon used historical data that provided insights into supply chain demand shifts, including data from the 2008 recession, country-level data since the beginning of the pandemic, unexpected weather events and a ream of other seemingly unrelated data that helped them separate seasonal demand from pandemic demand. In addition, the way they developed the new tools also informed more than $50 million in strategic long-term investments. Amazon also noted that one of the most useful benefits was developing the ability for both Amazon and their partners to really understand and adapt to unpredictable events.
Amazon Web Services (AWS) and the Dream Collective launched SheDares, an interactive learning program for women who want to change careers or return to the workforce. The no-cost learning platform caters to professional women who have not considered a role in the tech industry, where there is a shortage of female role models as well as other barriers, including where to start and the perception of a challenging and steep learning curve. The head of training for AWS noted that many skills, such as creative thinking, analytical thinking, problem solving and attention to detail are very transferable to tech.
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