Monthly Issue
From Home Furnishing Business
November 30,
2022 by HFBusiness Staff in Business Strategy, Industry 
The net impact was that a lot of money was pumped into households. In addition, the stay-at-home nesting frenzy contributed to the furniture industry surge initially, but it was the inflationary price increases that followed that drove growth, especially over the last year. Regardless of the reasons for the industry growth, one thing is certain, the demographics of consumer spending on furniture products changed. People went back to work in the midst of surging increases in wages along with competition for workers whose work habits had also changed. The roller coaster ride of the pandemic in 2020, gave way to post-pandemic 2021 when inflation began to take hold late in the year, followed by the economic chaos of as the furniture industry has been unsure exactly what to do to right the ship going forward. Will the furniture industry eventually retreat to the prepandemic days or build on lessons learned? Consumer spending on furniture slowed at the beginning of the pandemic in 2020 Q1, then picked up steam through the second wave in August/September. The industry received an additional bump when with the vaccine rollout in the first quarter of 2021, then slowed briefly September to December 2021 as the Delta variant surged.
Table A
But when inflation took hold and prices rose, growth has been steady through the third quarter of this year. Table A shows the progression.
It has been more difficult to quantify whether after the initial store re-openings in the second quarter of 2020 what portion of the spiraling industry growth can be attributed to more consumers purchasing furniture versus the increase in prices. However, data available on traditional furniture stores, one of the prime furniture distribution channels, shows that, especially this year, growth came in most cases from increased prices as opposed to selling more product to more customers. (See the sidebar article, “Traditional Furniture Store Average Ticket Sales Rise as Traffic and Number of Purchasers Falls”. Data from FurnitureCore, LLC. a subsidiary of Impact Consulting Services, Inc., parent company of HFB.)
Building on this background of COVID stimulus packages, heightened consumer interest in home furnishings and spiraling inflation, the remainder of this installment of Statistically Speaking examines consumer spending on furniture at the demographic consumer unit/household level looking at age (tied to generations), income and living arrangement (marital status). Data from the Bureau of Labor Statistics’ Consumer Expenditure Survey (CE) helps to bring into focus how the final impact of the pandemic in 2020 and 2021 compared to the “way it was” in 2019 before COVID changed the course of consumer spending, whether temporarily and permanently. The Methodology is presented in Figure 1.
The terms consumer unit, family and household are often used interchangeably for convenience; however, the proper technical term for purposes of the CE data is consumer unit. References to households in this article are synonymous with consumer unit. Also, the reader should keep in mind that even though average expenditures and sales went up dramatically in many segments, much of it was due to inflation.
Generational Furniture Expenditures Millennials (ages 26 to 41) are now the largest cohort of the generations as Baby Boomers continue to age. And they showed up in numbers both during and post-pandemic buying a lot of furniture in the process. Millennials increased average consumer unit furniture expenditures 44.1% between 2019 and 2021 from $583 to $840 (Table B, expenditures; Table C, growth). This large generation that the furniture industry has waited patiently to set up households, proved during the pandemic and recovery that they are ready to finally take over control of the furniture industry as the older Millennials beginning to age into the higher income categories. Meanwhile, GenXers (ages 42 to 57), though much smaller number, are still the most affluent workers and spend the most on furniture, surpassing the Millennials. In 2019, GenXers averaged $640 in annual furniture expenditures and grew that number to $909 in 2021, an increase of 42%. Of concern to the furniture industry is that the high-income GenXers (ages 42 to 57) are beginning to age out of this key prime 45 to 54 age group and as they age into the 55 to 64 age group will spend less on furniture. The industry is hopeful that the onslaught of Millennials will reach their same economic affluence as they age. Baby Boomers (58 to 76), who have been the heart of the furniture industry for decades, were more conservative spenders during the pandemic increasing average furniture spending from $514 in 2019 to $601 in 2021, a growth of only 16.9%. Baby Boomers should continue to slow expenditures as they age and their numbers dwindle (Table B, expenditures; Table C, growth).
Millennials (ages 26 to 41) continued to form households during the pandemic and recovery, increasing 6.1% and now represent 26.2% of total households increasing their share by 1.2 percentage points. As the youngest members of this Millennial generation continue to form households, they should soon surpass the GenXers (ages 42 to 57), who represent 26.5% of households, but have slowed their household growth (Table D). New to the scene is Generation Z (ages 10 to 25), only 4.5% of adult households in 2021, who are now beginning their assent into adulthood. The furniture industry will see their impact for decades to come as they continue to age in to the furniture buying population (Table D, growth in consumer units; Table E, percent of households). GenXers (ages 42 to 57) still have the largest share of industry sales at 33.7% with growth of 41.7% in 2021 compared to 2019. But the high growth in spending by the trailing Millennials during the pandemic of 52.8% 2019 to 2021, moved them closer to first place at 30.8% in share of industry sales (Table F, growth in total industry sales; Table G, percent of industry sales). Millennials (ages 26 to 41), being a larger cohort than GenZers will most likely take over their rightful place as the primary consumers of furniture in the near future. Baby Boomers, prior to the pandemic, controlled 32.2%, the second highest total dollar purchasers of furniture in 2019 behind the GenXers but ahead of the Millennials. Their purchases increased 18.2 during the two years of the pandemic and recovery. But as they continue to age, the Baby Boomer influence will continue to wane.
Furniture Industry Growth by Income Range Between 2019 and 2021, the average expenditure on furniture per household grew 37.3% from $521 to $716, and total furniture expenditures grew 38.7% (Table H). (Note: The BLS CE Survey’s consumer spending on furniture growth number here is higher than the 33.2% growth published by the Bureau of Economic Analysis, Personal Consumption Expenditures data. See “Figure 1: Methodology” for an explanation of the differences.) Three income ranges had higher growth than the U.S. household average, two being the lowest income ranges and the other being the highest income range. The two lowest income ranges, (1) less than $15,000 and (2) $15,000 to $29,999, increased their average furniture expenditures by 135.6% and 38.4% over the duration of the pandemic 2019 to 2021. These large increases suggest the major pandemic stimulus programs had a significant impact on lower-income household spending on furniture, as well as other durable and non-durable goods. On the other end of the spectrum, households over $200,000 annual income increased average furniture spending by 44.6% to $2,054 annually (Table H, average furniture expenditures; Table I, growth).
When the COVID-19 pandemic had calmed by the end of 2021, there were 1% more households than 2019 just before the pandemic began, but the economic structure of those consumer units had changed dramatically. The number of high-income households $150,000 to $199,999 had increased 16.2% 2019 to 2021, and households with income over $200,000 had grown an astounding 23.8%. Meanwhile middle- and low-income households with incomes under $70,000 declined in 4.7% in total between 2019 and 2021, with the only exception being households $15,000 to $29,999 which grew 1.4% (Table J).
The decline in the number of lower- and middle-income households again reflects the impact of the pandemic stimulus and unemployment programs. In 2021, 44.8% of U.S. households made $70,000 or more (Table K).
The additional expenditures in 2021 versus 2019 by the lower income groups provided an additional $5 billion in furniture sales based on the BLS Consumer Expenditure total of $98 billion in 2021 (see Figure 1. Methodology). However, these two brackets under $30,000 total only 6% of industry sales, up from 4% in 2019. It should be noted that this income group declined in number of households, but gained industry share with increased spending. Meanwhile, with the increase in household counts and spending, high-income households over $200,000 or more annual income gained 3.9 percent points in share of industry sales, growing from 20.7% of industry sales in 2019 to 24.6% in 2021, adding an additional $9.2 billion in CE calculated furniture expenditures (Table L).
The Future? As the leading edge of high-income GenXers (ages 42 to 57) begin to age into their 60s, they will still make a significant and positive impact on the furniture industry for the next 15 to 20 years. They will provide industry stability as they age, as did their parents, the Baby Boomers, just not to the same degree.
And if the economy does not throw the Millennials another catastrophic economic downturn next year as it did during the Great Recession when they were mostly in high school, college and their mid-20s and starting out, they will continue to form households, have children and buy furniture. Much of the future is in their hands.
And it will be interesting to see how the up-and-coming Generation Z (ages 10 to 25) will begin to make their mark. Early data suggests they may behave very different as consumers.
COVID-19 Pandemic Stimulus and Unemployment Benefits
Economic Impact Payments (EIPs). Research has shown that some of the furniture industry growth can be attributed to the three government stimulus packages as well as lengthy regular and special pandemic unemployment packages initiated by the government The distribution of pandemic stimulus payments began in late March 2020, with the last two payments occurring in the first quarter of 2021
Unemployment Benefits
The severity of the COVID-19 crisis was evident on March 21, 2020, when a then-record 2.9 million people filed initial claims for unemployment. The government acted quickly creating the Pandemic Unemployment Assistance (PUA) program which expanded eligibility to workers not covered by regular UI, including self-employed workers, gig workers, independent workers and others. According to the Department of Labor roughly $400 billion was spent on unemployment expansions.
Traditional Furniture Store Average Ticket Sales Rise as Traffic and Number of Purchasers Falls Traditional furniture stores spent years watching other durable and non-durable goods increase prices, only to see furniture prices fall further behind the curve. After the mandatory shutdowns issued by the Federal government at the start of COVID, other furniture distribution channels stayed open and gained ground, including online retailers, home improvement centers, mass merchants, and warehouse price clubs. The COVID-19 pandemic and subsequent recovery brought with it spiraling inflation, and for the traditional furniture stores, higher profits.
FurnitureCore’s industry database of traditional furniture store sales, tracked the pattern of growth, shown in the graphic below, including average store traffic/ups, average ticket sales and number of purchasers. This growth is also compared to the Census Bureau’s data on total furniture stores sales among all traditional furniture stores. Data is presented in indexed format with 2019 Q4 = 100 as the base quarter, just before COVID began. Indexing growth against a base year is an effective way to compare graphically dissimilar data with dissimilar formats.
After the initial shutdown at the beginning of COVID in 2020, average ticket sales rose gradually as shown in the graphic below until the fourth quarter of 2021, when inflation really took off. Meanwhile, since 2021 Q3, traffic has slowly declined and the number of purchasers with it.
October 4,
2022 by HFBusiness Staff in Business Strategy, Industry
As the global manufacturing economy expands, sorting out the value of domestic furniture manufacturing in terms of U.S.-supplied or foreign-imported parts is tricky and complex. Five years before the 2020 pandemic, the U.S. Department of Commerce Economics and Statistics Administration issued a research study titled “2015: What is Made in America” to explore the subject in each of the major U.S. manufacturing sectors. The conclusions were the first to bring into focus the impact of the global economy on the U.S. furniture industry. The report showed that 18% of the gross output of domestically produced furniture and related products is foreign content. It went further to look at the distinction between the U.S. content of what we produce versus what we consume. The conclusion states that in 2015, 53% of final U.S. purchases of furniture and related products were imported, either by purchases of imported final goods or imported intermediate inputs in U.S.- produced goods. Against this backdrop, Statistically Speaking in this issue explores the ongoing crises of Made in America furniture products.
Table A illustrates how that trend has exploded since then as e-commerce took off and importing products grew easier and easier. In 2012, the ratio of domestic production to imports was more than double at 2.11 compared to 2021 at 1.17. Imported furniture and related products finally surpassed domestic production briefly for two months in April and May of this year, but then fell below June’s level (Table B). However, it is anticipated this dip is temporary. And even with the Covid-related lockdowns, primarily in China, and subsequent supply chain problems from September to November of last year, the imports recovered quickly. Since December of 2021, manufacturers’ shipments have climbed each month up to $6.22 billion in May from a low of $5.71 billion in the previous March. The climb slowed slightly in June – decreasing 1% to $6.16 billion (Table B).
Figure 1 focuses specifically on the key economic indicators for U.S. domestic manufacturing including shipments, new orders, inventories and unfilled orders. In the second quarter of this year compared to the prior first quarter, average monthly shipments, new orders and inventories all trended upward, while unfilled orders dropped 1.7%. But in the last month, June, monthly data showed shipments trending down compared to May as the other indicators all had increases. These indicators are each explored in more depth throughout this article.
Over the last 10 years, domestic manufacturers’ shipments of furniture and related products peaked in 2018 at $77.8 billion. The value of shipments began to decline in 2019 by 3.7% before diving 7.8% more in 2020 (Table C). U.S. shipments began to rebound in 2021 by 0.6% as shutdowns continued in China, opening a window for domestic manufacturers. Then in the first half of this year domestic production took off growing 6.5% compared to the first half of 2021.
After an uphill battle in 2021 with increasing consumer demand and supply chain disruptions, the value of domestic shipments in the first quarter of this year finally jumped 4.4% from $17.46 billion in 2021 Q4 to $18.23 billion in 2022 Q1. Slow growth returned in the second quarter increasing 1.7% over the prior 2022 Q1 (Table D).
Although not an exact apples-to-apples product comparison, the tables have turned for manufacturers and retailers when it comes to inventory levels. Throughout 2021 and early 2022, manufacturers of furniture and related products carried a much higher ratio of inventory to shipments compared to retailers’ inventory to sales ratios (furniture and home furnishings products) (Table E).
But in March of this year, the tide changed as retailers tended to build more inventory than manufacturers. By June of this year, the ratio of inventories to dollar shipments for manufacturers was 1.57X compared to retailers at 1.69X.
After unfilled orders increased consistently month-to-month throughout most of 2021, manufacturers have been ever-so-slowly whittling down the sizable backlog this year. However, the data for June showed a rise again of 0.5% (Table F).
In the years leading up to the pandemic (2018 – 2019), manufacturers’ monthly unfilled orders/backlog was mostly consistent at 130% of the value of shipments (ratio 1.3X). The ratio peaked in December of last year at 1.87X as unfilled orders approached double the shipment volume. In May of 2022, the backlog ratio dropped to 1.66X before popping up slightly to 1.69X in June (Table G).
New orders, the life blood of manufacturing, stayed close to $6 billion a month for most of 2021 before dipping down to $5.78 billion in November last year. However, monthly orders have consistently been above $6 billion a month since March of this year reaching $6.21 billion in June (Table H).
While manufacturers’ shipments grew consistently 2012 to 2016, the number of manufacturing establishments declined rapidly (Table I). In 2011 the number of companies manufacturing furniture and related products totaled 18,985 before falling 7.2% over the next five years to 17,623 in 2016. Since then, growth in establishments has been relatively flat until an uptick to 17,878 companies in 2021. (Table I).
While the number of manufacturing establishments was falling and shipments were growing 2012 to 2016, employment grew 12.4% by 2017 peaking at 394.9 thousand employees. Not surprisingly, employment took a dive in 2020 down to 359.1 thousand before climbing back up to 385.4 thousand over the first half of this year.
Although manufacturing employment increased rapidly at the beginning of this year, jobs peaked in March at 387.1 thousand and have been falling at roughly 0.2% a month down to 384.6 thousand in July (Table K).
Annual hourly wages have increased every year over the last decade but the biggest gains have been made in the last two years, jumping 5% to $24.17 in 2021 and another 5.3% to $25.46 in the first six months of this year (Table L). High inflation and slowing consumer demand are giving all areas of the economy pause, especially furniture manufacturers, who have seen inventories rise uncomfortably, despite steady orders. Most are taking a cautious approach forward.
July 18,
2022 by HFBusiness Staff in Business Strategy, Industry
In 2020, when stores reopened and furniture retailers had to play catch up, growth exploded at 20.7% in the third quarter (Table A). Furniture and bedding industry sales increased each quarter before growth slowed over the last quarters. Sales have stayed roughly $40 billion since the second quarter of 2021.
Economic Indicators Worrisome
As shown in Table B, the feds fired a warning shot during the first quarter of this year when the GDP fell 1.4% over the fourth quarter of last year. This is first decline since the pandemic. GDP Update: An early forecast by the Atlanta Federal Reserve keeps GDP for the second quarter at 0.9% growth just above recession level, which is generally defined as negative growth in two consecutive quarters.
Consumer purchasing power has declined each year since 2019 – falling a total of 13.1% from January 2019 to April 2022. Half of the decline (-6.5%) occurred during 2021 (Table C) as inflation took over. Consumer Purchasing Power Update: May numbers fell an additional 1.2% over April.
Consumer confidence was riding high in 2019, averaging 128.3 for the year (1985=100) according to The Conference Board’s Consumer Confidence Index. That confidence carried over into January and February of 2020 (Table D) at 132.6 prior to the bottom falling out when the Covid-19 pandemic hit. During the first 11 months of the pandemic, confidence levels wavered between 85 to 97 before the consumer began to feel confident again. But since January of this year, consumer confidence has declined from 111.1 to 106.4 in May.
After years of falling prices, the furniture industry welcomed price increases that were justified by supply and demand and then by steady inflation (Table E). With prices slowly rising throughout 2019 and 2020 (0.1% to 0.2%), in 2021 prices exploded more than 1% a month. However, as of April 2022, the rate cooled to less than half a percent a month (0.4%). CPI Update: Furniture and bedding prices fell 0.2% in May over April.
The amount of price growth from January 2019 to April 2022 differed by specific furniture and home furnishings product (Table F). The living room, kitchen, and dining room furniture category, other furniture category, major appliances and window coverings all jumped over 25% in price. Prices of bedroom furniture increased 16.8%, while clocks, lamps, and decorator items increased 14.2%. Televisions, a category that has been declining in price for a few years, decreased 20.5% in 2019 and continued to fall into this year. CPI Update: Prices fell in May over April for all Table F categories, except for the broad category of Living Room, Kitchen, and Dining Room Furniture as well as nonfurniture products of Floor Coverings; Dishes and Flatware; and Nonelectric Cookware and Tableware. One-month declines were less than 1%.
Soaring Industry Prices Cool
As shown in Table G, the price spike in 2021 for most furniture and appliance products has waned in 2022. In 2021, total furniture and bedding prices jumped 13.8% and in 2022 the growth is 4.6%. Major appliances experienced its heavy price growth in 2020 (16.6%) and has remained steady – increasing by 8.4% in 2021 and 8.0% in 2022. While television had price increases during 2021 (4.4%), those numbers have quickly fallen again in 2022 – down 5.1%
Among select home furnishings products, growth for floor covering is up 4.8% in 2022 compared to 6.8% in 2021. Window coverings growth is cut in half from 12.9% in 2021 to 6.2% in 2022. Clocks, lamps, and decorator items have actually strengthened momentum – increasing prices another 7.3% in 2022 after increasing 5.9% in 2021. Dishes and flatware hit the price hike in 2022 – jumping 9.1% by April (Table H).
Imported Goods Rebound
The wholesale price increases on imported goods were less than half the inflation seen at the retail level in 2020 and 2021. In 2021, price growth for both imported upholstered household furniture manufacturing and imported nonupholstered wood household furniture manufacturing was less than 5% compared to the 13.8% for U.S. retail sales of furniture and bedding (Table I). But for the first three months of this year, wholesale price increases have kept up with U.S. retail inflation for imported nonupholstered wood furniture, but is flat for imported wholesale upholstered household goods. Import Prices Update: Wood furniture import prices continued to increase slightly in May over April (0.1%), and upholstered furniture prices declined (-0.1%).
Imports from China had been declining until last year when they grew 21.48% over the pandemic-ridden 2020. However, 2021 imports of $15.8 billion are still under 2015 levels of $18.4 billion. Imports from Vietnam have been increasing over the last few years – now 25% of total import sales and up 79.7% in 2022 Q1 versus 2021 Q4. With supply chain issues, imports from Mexico ramped up in 2021 – up 44.6% over the past year (Figure 1). Furniture Imports Update: The prices of total furniture product imports fell 1.6% in May over April. All key countries shown in Figure 1, declined in product prices, except for China, up 2.6%, and Italy, up 23.6%. Significant price decreases over 10% were seen from Mexico, Canada, and Indonesia.
Housing Market Cools
The red-hot housing market of 2021 began to cool this year as existing home sales fell 3.04% in March over February and another 2.43% in April. New homes sales fell more dramatically – decreasing by 10.5% in March and 16.6% in April. Meanwhile the new housing prospects for the future cooled as housing starts fell 0.23% in April and housing permits decreased by 3.19%. However there is a bit of help on the way as construction of new units continues to grow – up 2.09% in March and 1.61% in April (Table J). Housing Update: May data was not yet available for new home sales, but three other key indicators fell – existing home sales (-3.4%), housing starts (-14.4%), housing permits (-7%). New houses under construction grew slightly, 0.4%.
As shown on Table K, existing home sales reached 6.5 million in January before dropping each month to 5.6 million in April. New Home Sales also peaked in January at 845,000 before falling to 591,000 in April.
While housing starts and permits are higher than a year ago, they have slipped as of April to 1.724 million and 1.819 million respectively. As stated before, there is boost of new construction with 1.641 million units under construction as of April.
During most of 2021, mortgage interests were very low and added to prices soaring. In August of 2021, a 30- year fixed rate was down to 2.84%. As of late June, rates were up to 6% with promises of higher hikes. The darkening clouds appear to have set in for now. Leading up to this summer, employment gains, increasing wages, and business investments were thought to be enough to hold off a recession. By the time this issue of Statistically Speaking “hits the readers’ hands”, the picture will be clearer. Regardless, as the U.S. economy tries to right the ship, the furniture industry must dig in and not be taken by surprise.
March 24,
2022 by HFBusiness Staff in Business Strategy, Industry
The U.S. Personal Consumption Expenditures (PCE) price index for all consumer spending in total goods and services rose in 2021 at the fastest pace since 1981, 5.8%. The better-known consumer price index (CPI) jumped by an even higher 7%, roughly 5% higher than the Federal Reserve considers a healthy annual inflation close to 2%. The Fed views the PCE index—the core rate in particular—as the most accurate measure of U.S. inflation. It is more comprehensive and takes into account when consumers substitute cheaper goods for more expensive ones, among other things. (See Figure 1: Definitions).
As shown in Table A, up until 2021, furniture and bedding products were worth less than in 2012, and growth came through selling more product at a cheaper price with imported goods adding the pressure.
Consumer spending on furniture and bedding products increased 21.9% in 2021 over the previous pandemic year (Table B). In terms of chained dollars (2012 base year), the industry grew 13% - inflation pushing current dollar growth 8% higher. (See Figure 1. Definitions). In 2015 through 2017, current dollar growth could not keep up with chained dollar growth. The deflation really began to make a mark in 2016 with furniture industry current dollar growth of 6.7% compared to 9.2% for chained growth, forcing companies to sell almost 50% more to make up for the falling prices.
While annual 2021 produced major growth in consumer spending for furniture and bedding, sales dipped down by the end of the year. In January of last year, furniture industry sales jumped 17.4% over the preceding December 2020. March, August and October also showed monthly growth – 8.4%, 4.2% and 3.3%, respectively. However, consumer spending slowed in November, down 1.3% over October and fell significantly in December, down 7% compared to November (Table C). As shown in Table D, furniture is the fastest growing home furnishings product with consumer purchases well over $100 billion compared to all other products in the same category.
Among electronics, consumer spending on computer software and accessories steadily increased an average of 12.6% from 2016 before pandemic demand and inflation pushed spending higher to 18.2% in 2021 to $135 billion (Table E). The pandemic also pushed increases in consumer spending on slower-to-grow categories – major household appliances, televisions and personal computers/tablets – above 18% from 2020 to 2021.
Figure 2 summarizes the growth in consumer spending among selected major furniture and home furnishings categories over the last three years add a column to reflect inflation in 2021 (December 2021 over December 2020). Furniture, along with carpets and other floor coverings, were the best performing of the home furnishings categories, both increasing 21.9% in 2021. However, all other categories also experienced double-digit growth above 15%. Furniture products were also hit the hardest with inflation at 13.8% in 2021, partially explaining the high growth. No other home furnishings broad category was close to that number in terms of inflation. (Note: Year-end Inflation is usually calculated as December over prior year December, in this case December 2021 over December 2020, 13.8% for the furniture industry. However, furniture industry average annual monthly inflation in 2021 was 8%.)
How did furniture growth and inflation compare to other consumer products? Figure 3 shows that durable goods, including furniture, were the economic workhorses of the pandemic. Consumer spending on services had led economic growth since 2015, outpacing spending growth on both durable goods and nondurables. However, during the pandemic shutdown in 2020, consumer spending on services dropped 6.7% and grew the slowest of the three main sectors of the economy – durable goods, nondurables (including food and energy) and household consumption of services (Figure 3). The drop in 2020 in services spending was not entirely the consumer’s choice as restaurants, theaters, sports arenas, and travel closed for a significant period. However, many consumers have been slow to return those services. Inflation for gasoline and other energy goods was highest at 47.9% as well as 22.8% for motor vehicles.
Quantity Index vs. Price Index The falling prices and deflation experienced by the furniture industry coming out of the Great Recession only started to recover last year as inflation began to impact furniture and most other consumer products. Without growing price support, the quantities needed to maintain annual growth have skyrocketed.
Figure 4 depicts how since 2021, the quantity index of furniture items sold grew at twice the rate (2.0) compared to price growth. Reading the table for furniture, a quantity index of 209.5 means that quantities of furniture purchases have increased 109.7% between 2012 to 2021 (2012 index=100). Conversely, prices are only 2.3% above 2012 levels, and this just happened in the last year 2021. But furniture has fared better than all other home furnishings broad categories. The television industry is an example of one of the hardest hit electronics categories experiencing exploding price deflation falling 73.3% 2012 to 2021. The rate of growth in quantities sold versus price increases for selected home furnishings and electronics is shown in Figure 4. Product sales growth is a combination of the increase (or decrease) in prices plus the increase (or decrease) in quantities sold. (Note: Year-end inflation is generally reported December over previous year December. Comparing quantity and price indexes requires averaging monthly indexes to reflect the impact for the whole year.)
Deflation (falling prices) continued for the furniture industry coming out of the Great Recession until 2018 when inflation picked up 0.1%, finally closely matching the quantity index to current dollars (Table F). The price index hovered above 2% from 2018 to 2019 and was 0.1% from 2019 to 2020 before exploding during the pandemic. In 2021, the quantity index (13%) paired with inflation/price index (8%) pushed current consumer spending on furniture to a 21.9% growth.
Pricing remained relatively steady for carpets and other floor coverings after 2013 (Table G). Current dollars kept up to the quantity index with very little change in the price index. The pandemic pushed the price index up 2.6% from 2020 to 2021, increasing current dollars by 21.9% with a quantity index of 18.9%.
After a negative price index through 2018, consumer spending on major appliances began to improve. Current dollars rose by 9.9% from 2019 to 2020 and another 18.8% following the start of the pandemic. The price index reached 10.8% from 2020 to 2021 (Table H).
By far the hardest hit from falling prices before the pandemic is the television category (Table I). The price index dropped to as low as -19.6% in 2016 and the quantity index reached as high as 31.2% in 2019 with current dollar growth at only 5.8%. Inflation has helped the pricing gap for televisions. From 2020 to 2021, quantity index was 12.4% and 5.8% from the price index pushed consumer spending to 18.8%.
Compared to other home furnishings products, inflation has given the furniture category a big jump in pricing last year. The category of clocks, lamps, lighting fixtures, and other household items suffered from a negative price index (deflation) up until last year. In 2021, consumer spending grew 21.4% alongside a quantity index of 18.1% and just 2.8% on the price index (Table J).
July 29,
2021 by HFBusiness Staff in Business Strategy, Industry
Furniture Prices Play Catch Up Most furniture and home furnishings industry products have been in a price slump since the mid-2000s as imports exploded into the United States. During the pandemic, furniture and bedding prices started to climb noticeably in the second half of last year as the economy began to partially reopen and really took off during the first and second quarters of this year. Table A shows the quarterly price index averages 2020 Q1 to 2021 Q2 (April/May). The price shifts discussed here refer to two overlapping periods, not directly tied to quarters. The first compares the CPI at the end of December 2019 vs. the CPI in May of this year, which measures where we were a couple of months before the pandemic to where we are now with the recovery. The second data point focus is on the first five months of 2021 comparing the CPI at the end of December last year to May of this year.
Since the start of 2020 through May of this year, furniture and bedding prices are up 7.7%, weathering the pandemic downturn in 2020. Most of that growth has occurred during the first five months through May, where prices have jumped 5.4% compared to December last year (Table A).
As many consumers upgraded their outdoor spaces during the quarantine, prices of outdoor furniture began to climb right away (Table A). As of May, the “other furniture category,” of which outdoor is a large part, has grown 14.7% since the beginning of 2020 prior to the pandemic, with most of that growth coming throughout 2020. For the first five months of this year compared to last December, the category is up 4.9%.
Living room, kitchen, and dining room furniture prices have also shown major growth this year, up 7.8% since the start of the year through May. Since the start of 2020 pre-pandemic to May, prices are up 10%. Prices for bedroom furniture, however, have lagged other categories, increasing only 1.7% since the start of last year through May (Table A).
Meanwhile, prices for major appliances, in short supply with consumers on hot home buying and renovation spending sprees, have skyrocketed above all furniture categories, growing 21.8% since the start of last year, with most of that growth occurring last year. Since the start of the year, major appliance prices are up 4.4% through May (Table A).
Consumer prices in other home furnishings products fluctuated during the pandemic, with many declining substantially before increasing (Table B). Rising slightly in 2020 Q3 to an index of 100.2, floor covering prices have only recently exceeded prices from January of last year. Prices are up 3.2% for floor coverings since the beginning of this year through May. Since the start of last year (just prior to the pandemic) to May 2021, clocks, lamps, and decorator item prices have grown 2.8% and nonelectric cookware and tableware have grown 5%. Television prices are up 2.1% in total since the start of last year after falling rapidly during all of 2020. After declining significantly, the first five months of 2021 have seen television prices increase 7.4%. Prices are yet to fully recover for dishes and flatware, up 0.6%, and window coverings, down 1.4%, since the start of 2020 through May of this year (Table B).
Not surprisingly, the price of outdoor equipment and supplies rose sharply during the second half of 2020, increasing 4.5% since the start of the pandemic through May of this year. Prices of tools, hardware, and supplies have grown steadily since late last year — up overall 5.8% since the start of January 2020 (Table C). Rising prices in the furniture industry can’t be attributed to wholesale import prices. Prices for most furniture categories and major appliance imports fell during the first half of 2020 and are slow to recover. Only two categories, nonupholstered furniture and institutional furniture/ kitchen cabinets, have just reached prepandemic prices in May. Upholstered furniture, office furniture, and appliance prices are still slightly below the beginning of 2020.
Historical Growth in Consumer Prices The early to mid-2000s were considered steady and stable growth years for the furniture and home furnishing industries and provide a healthy benchmark for analyzing price growth. Since that time, the industry has weathered a recession and now a pandemic. Overall, the CAGR (compound annual growth rate) has steadily increased each year for most consumer items since 2005 (Tables E, F and Figure 1). Since 2005, price increases over time have been staggering in some of the key areas, such as healthcare, with household furnishings and operations noticeably different with only a 2.2% increase since 2005 (Table E).
In the broad furniture and home furnishings product categories and other miscellaneous items, such as apparel, sporting goods, and computers, prices have historically decreased since 2005, many significantly (Table F). Furniture and bedding prices overall have declined 6.4%. Major appliances are up slightly at 2.1%. Other home furnishings items such as window coverings, decorative accessories, dishes and cookware have seen price declines since 2005, between -27.6% and -57.1%. Televisions prices have fallen 94.8% and computers prices are down 73.3% (Table F).
Looking at the historical indexed growth in prices of the key consumer products and services featured in Table G, only household furnishings and operations remained flat throughout time. Prices of new cars and trucks have also increased very slowly. As shown in Table H, the consumer price indexes for food at home (groceries) as well as food away from home (take-out and restaurant dining) have historically continued to climb. Annual growth rates approach 2% for food at home and 3% for food away from home (Figure 1). Both saw prices increase more than 3% during the pandemic. Consumer prices for furniture generally declined from about 2006 to 2015 and have yet to catch up to those levels (Table I) despite the recent surge during the pandemic. Since 2017, all categories have increased prices, with major appliances growing 4.6% from 2019 to 2020 and another 8.2% monthly average this year to May 2021 (Figure 1). As shown in Table J, the home furnishings category has not seen the same surge in prices as furniture and major appliances since the pandemic began. With the exception of floor coverings, at a CPI of 111.6 in May of 2021, all the other home furnishings categories are still well below 2005 prices.
The graphical contrast in the growth in the prices of televisions compared to cable and satellite television services is shown in Table K. As technology has made televisions better and more affordable, prices fell almost 100% since 2005 (down 94.8%) compared to the cost of cable services increase of 50.7%. The trajectory of annual price increases since 2005 for key consumer items and services is shown in Figure 1. This table shows the compound annual growth rate for selected time periods. Although furniture and appliances have lagged behind historically, they have shown some of the best growth of all product areas this year through May. As the world continues to adapt to the ongoing economic results of the pandemic, price increases in the furniture industry are starting to become the new reality.
