Monthly Issue
From Home Furnishing Business
April 9,
2021 by HFBusiness Staff in Business Strategy, Industry 
However, it was not until around 2005 when online shopping kicked into high gear only to get stymied by the Great Recession. It was five more years in 2010 when e-commerce retailers, identified as those whose primary business activity is in furniture and home furnishings, really took off. But even then, it took until 2014 for brick-and-mortar furniture stores to fully realize how rapidly they were losing ground. At that same time, Wayfair, with its subsidiaries, went public and other furniture and home furnishings e-tailers began to flood the marketplace. E-commerce sales grew swiftly until last year when the pandemic accelerated growth even faster with online furniture and home furnishings sales reaching an estimated $97 billion in 2020 (Table A).
In this feature, we explore how e-commerce retailers with furniture and home furnishings as their primary business activity have impacted brick and mortar stores and how these traditional retailers are attempting to slowly catch up. Furniture and home furnishings retailers are now divided by the Census Bureau into three categories –
(1) Traditional brick and mortar stores, where e-commerce sales, if any, are fulfilled from within the store or a common distribution center,
(2) Omnichannel stores which are larger retail chains with separate brick and mortar and e-commerce operations, and
(3) Pure Play stores that are online retailers with no brick-and-mortar presence and who only operate online.
Note, that some Pure Play retailers are opening brick and mortar stores, primarily as clearance stores. Also note that the old mail-order category is becoming a grey area and is generally incorporated into e-commerce sales as most transactions are online.
As shown in Table B, e-commerce sales from omnichannel brick and mortar stores reached $14 billion in e-commerce furniture and home furnishings sales in 2020 – gaining a share of 7% of total furniture and home furnishings sales. However, the competition of Pure Play e-commerce now makes up 40% of the total industry with $84 billion in sales. While still the majority share at 52%, store front sales are quickly losing ground to online retailers. Store front sales (non e-commerce) had small but positive growth from 2017 through the first two months of 2020 before the pandemic resulted in a drop of 5.6% for the year (Table C).
After e-commerce sales increases above 20% in 2017 and 2018, traditional smaller brick and mortar retailers experienced a large downturn in sales in 2019 of 17.5% most likely the result of either retailers crossing over from traditional brick and mortar stores into the omnichannel or smaller traditional retailers unable to grow their online businesses. Omnichannel brick and mortar store sales catapulted 47.7% in 2020 after annual steady growth between 11% and 13% from 2017 to 2019. A few pure play retailers are sticking their toes in the omnichannel category, opening mostly brick and mortar clearance centers for now. Sales growth among pure play retailers has remained consistently high since 2017 with 2020 growth at 29.2%.
Over the last four years the gap has widened between pure play e-commerce sales and omnichannel brick and mortar sales among furniture and home furnishings stores (Table D). While store front sales are down from $111.4 billion in 2017 to $109.6 billion in 2020, pure play e-commerce sales have almost doubled – increasing by $40 billion.
Brick and mortar omnichannel retail sales have also almost doubled 2017 to 2020 to $13.9 billion. Pure play e-commerce retailers have grown from contributing 27.3% of total furniture and home furnishings sales in 2017 to 40.1% in 2020. While omnichannel retailers keep increasing their share of total sales – finishing 2020 at 6.6%, the growth from 2019 to 2020 was 1.7 percentage points compared to the pure play e-commerce category’s increase of 6.6% (Table E).
Looking only at e-commerce sales, when it is all said and done, omnichannel retailers have made little headway in cutting into the market share of the pure play furniture and home furnishings retailers. In 2017, omnichannel businesses controlled 13.7% of e-commerce sales and in 2020, 13.9% (Table F).
The internet’s impact on brick and mortar furniture and home furnishing store sales last year cannot be overstated. Wayfair alone acquired five million new customers in just three months, something that normally takes a year to achieve. Despite the pandemic and all its restrictions, Wayfair fulfilled nearly 19 million orders in the second quarter – a 106% increase from the same quarter a year ago. Brick and mortar companies that have successfully transitioned into omnichannel retailers with dedicated e-commerce business models have made progress in keeping up with pure play growth but have gained little market share away from them.
What is unclear in the data is how store front sales have grown within the omnichannel compared to their e-commerce activity. Many smaller traditional retailers are without resources to enter the e-commerce marketplace with any conviction and, in many cases, are facing dire circumstances just trying to keep the doors open.
January 22,
2021 by HFBusiness Staff in Business Strategy, Industry
Many also reported, not just that they liked working remotely, but also getting away from the frantic lifestyle of a big city. There has been a lot of discussion in the media about the pandemic causing an exodus of people from big cities as more companies are looking at “working from home” as a viable, long-term solution. Early evidence suggests many families are already exploring alternatives. A late summer 2020 survey by Redfin, the home listing company, shows that before the pandemic, 37% of its online searches were in urban areas, but only 19% during the pandemic. Suburban area searches grew from 43% before to 50% during the pandemic. And perhaps, most shocking, 9% of the online searches prepandemic were rural areas compared to 19% during COVID-19 (Figure 1).
Redfin also reported that 29% of people looking for homes on its sites in the third quarter of 2020 were looking to move to a different city.
It is still too early to tell if the shift out of the urban areas will occur or how it will affect small markets. For decades smaller markets have seen steady decline across the country with population shifts to bigger markets. Despite the losses, many small markets are continuing to produce steady furniture industry sales. This month Statistically Speaking dives into the segmentation of markets by furniture industry sales looking at population shifts and employment and income growth with focus on the trajectory of small cities.
Small markets include small MSAs (under $50 million in furniture industry sales), micro statistical areas, and rural areas. These markets represent 18.4% of the U.S. population (2019), and include 68.6% of total counties. Small MSAs equal 29.5% of the total 404 metro areas. Of importance to the furniture industry is that small markets account for 14.2% of personal income as of 2020 Q3, but only 11.6% of furniture industry sales (Figure 2). Furniture Industry Sales As shown in Table A, the top 28 markets, contributing over $1 Billion each in furniture industry sales, make up 40% of the total industry. Mid-to-large MSAs, between $50 Million and $999 Million, contribute almost half (47.7%) of furniture industry sales, and smaller markets under $50 million make up the other 11.6%. All markets size segments increased in furniture industry sales each year since 2017 (Figure 3). However, growth varies significantly by individual MSA. The combined growth diminished slightly between 2018 and 2019 with many retail size segments – large and small – falling below a 5% increase. Despite the pandemic, 2020Q3 YTD combined sales in all retail sales ranges are above 5% growth with the exception of rural areas at 4.9%. The impact of Federal stimulus on this growth is unknown at this time.
Figure 4 shows a sample of key performing markets within these market size segments. Excluded are markets where positive industry growth may have been impacted by one of the many natural disasters seen in the past two years. Small Market Population Shifts While the population of the United States grew swiftly over the last 60 years, not quite doubling, the actual share of the population living in small markets did not change as much as one might think. Table B shows small markets lost only seven points in population share. However, because of population growth, these same small markets gained almost 15 million people 1960 to 2019.
Since 2010, population growth in general slowed. Over the last five years, large markets saw the most growth (over 4%) (Table C). Small markets struggled to maintain the current population levels. Rural areas began losing population gradually each year, and since 2014 lost 0.7% of its residents.
Over a third of the U.S. population lives in only 183 counties out of a total 3,142 (Figure 3). These 28 markets (MSAs) combined are the fastest growing in population – up 4.2% from 2014 to 2019. Meanwhile, the slowest metropolitan population growth occurred in MSAs under $50 Million in furniture industry sales. Markets with $25 Million to $49 Million in sales increased population by only 0.7% and those under $25 million just 1.3%. And over the last 10 years, rural areas gradually lost population for the first time in history. Table C and Figure 5 show for the five-years 2014 to 2019, rural areas lost almost 1% of its residents.
One of the biggest problems facing the furniture industry is the slow and often negative population growth of future prime furniture purchasers. Millennials are expected to take up some of the slack over the next 10 years as Baby Boomers continue to age out of prime furniture buying years. Table D shows the Millennial population now fully into adulthood with ages 25 to 34 years growing 5.7% over the last five years. On the flip side, the heart of the Baby Boomers (ages 65 to 74 years) grew by 19.5% 2014 to 2019 which in turn reduced the 45 to 54 age group populated by the smaller size of Generation X. This affluent cohort remains strong furniture buyers.
Figure 6 may cause many industry retailers to panic seeing the dramatic shift from 2014 to 2019 in the population age groups in the different sized markets. Some examples:
• Low U.S. birth rates reflect the negative growth in all markets for the 0 to 9 age group.
• Smaller markets show negative growth in almost all age groups up to 25 years old, further reflecting on the long-range future of these communities.
• Millennials are firmly entrenched in the larger markets over $50 million in industry sales.
Employment Growth
Coming out of the Great Recession, employment grew rapidly through last year – up 7.3% for the total U.S. from 2014 to 2019. However, this year the pandemic lowered U.S. employment to 2015 levels as of October 2020. From 2014 to 2019, employment grew rapidly in the big markets - jumping over 9% in markets with furniture industry sales above $500 Million. As with population growth, increases in employment grew at a slower rate (roughly 3%) among smaller markets. Conversely employment growth in smaller markets did not fall as far as bigger markets from December 2019 to October 2020 (Table E).
Income
Alongside employment, personal income grew rapidly for all market ranges between 2014 and 2019. Not surprisingly, the two biggest market segments showed the highest growth at 26.8% and 28.5% respectively. Markets ranging from $50 Million to $499 Million had income growth between 20% and 23%. Rural areas and markets with industry sales from $25 Million to $49 Million ranged in income growth from 13.8% to 17.6% over the previous five years (Table F). If furniture industry sales in smaller markets had kept up with these cities’ income levels, they would have gained an additional $2.4 billion dollars in industry share.
Questions remain: Can the bleeding be stopped in smaller markets? Will younger people and families be enticed to flee the big cities for a different lifestyle? Is the “work from home” or “work from anywhere” really a revolution or just a pandemic blip in our economic history? Small markets need a hook – either vacation spots, rural scenic areas, or cities where the drive into urban workplaces one or two days a week would be doable.
September 29,
2020 by HFBusiness Staff in Business Strategy, Industry
U.S. furniture imports peaked at $31.8 billion wholesale in 2018 before dropping 6.1% to $29.9 billion in 2019. (Table A and B). Furniture imports have continued to fall from 2019 Q2 to 2020 Q2 – decreasing 13.6% from $14.9 billion to $12.9 billion and an additional 12.4% from the first quarter of 2020 to the second quarter.
Furniture exports have wavered over the past 6 years and were on the rise before declining 3.9% 2018 to 2019 from $3.6 billion $3.5 billion. Over the past year (2019Q2 to 2020Q2), U.S. furniture exports have plummeted 21.4%. And during the pandemic between Q1 and Q2 they fell 17.2%.
It wasn’t until the end of 2018 when the U.S. and China entered into the famous “Tariff Wars” that duties on imported furniture, bedding and other home furnishings goods to the U.S. totaled more than 1.1% of the import value. Since that time, duties have risen to 8.4% of the total import value with 90% of the revenue coming from China (Table C).
Imports
Traditional household and institutional furniture imports totaled $29.9 billion wholesale in 2019, down from $31.5 billion in 2018. Most imports of furniture products peaked in 2018 before the decline began in 2019, including upholstery, nonupholstered wood furniture, metal furniture, and mattresses (Table D).
As shown in Figure 1 and Table E, most furniture categories increased during 2017 and 2018 and once the tariffs hit, those numbers began to decline. With the introduction of bed in a box, Mattresses imports jumped dramatically in 2017, and this year 2019 Q2 to 2020 Q2 – increased 39% alongside decreases for all other categories. Once the pandemic arrived at the end of March, imports continued a downward trend from the first quarter this year to the second quarter with the exception of imports coded to all other “Household Furniture (except Wood and Metal)”.
The U.S. imported goods from 132 countries in the first half of 2020, totaling $12.9 billion dollars wholesale. This number is 13.6% less than 2019 Q2 YTD. In 2014 China exported over 5X the goods to the U.S. as Vietnam. That ratio has slowly closed over the last seven years to 1.9X the amount this year (2020 Q2 YTD). Shown in Figure 2 Chinese furniture imports dropped from $18.4 billion in 2018 to $14.2 billion in 2019. And this year from 2019 Q2 to 2020 Q2, the number decreased from $7.7 billion to $5.5 billion. On the flip side, imports from Vietnam increased from $4.3 billion in 2018 to $5.9 billion in 2019.
Vietnam was also the only country in the top 5% of U.S. importers to have positive growth between 2019 Q2 and 2020 Q2 – increasing from $2.6 billion to $3.0 billion. Although Chinese imports are down this year 2019 Q2 to 2020 Q2 YTD by 28.2%, as the pandemic took hold in the U.S., China’s growth jumped 11.2% between the first and second quarters (Figure 3). Meanwhile, imports from Vietnam, which had jumped 35.5% in 2019 and another 16.5% from 2019 Q2 to 2020 Q2, decreased 23.2% from 2020 Q1 to 2020 Q2. Furniture imports from Mexico have also increased steadily through 2019 before falling in 2020.
As a percent of total imports, China still leads the way at 47.6% in 2019 but that percentage has declined from 58% in 2014. In 2020 Q2 YTD, China accounted for 43% of total imports compared to Vietnam at 23.1%. Vietnam has also increased from 11.2% of total U.S. furniture imports in 2014 to 19.6% in 2019, while Mexico and Canada have both hovered around 5% (Figure 4).
Exports
As shown in Figure 5, Canada is the only major country importing significant amounts of U.S. furniture goods, with consistent annual imports around $1.7 billion. Over the past year (2019 Q2 to 2020 Q2), all the countries contributing over 1% to U.S. exports decreased, including Canada – down from $885 million to $736 million.
Canadian exports increased by 0.5% from 2018 to 2019, but then decreased by 16.8% from 2019 Q2 to 2020 Q2 and 10.7% from the first quarter of 2020 to the second quarter (Figure 6). This year Canada still represents over half of the U.S. export dollars (53.3%) – up from 50.6% in 2019. Mexico is the next highest contributor at 8% this year, followed by United Kingdom at 2% (Figure 7).
The U.S. has not had a positive foreign trade balance since the 1970s. In furniture, 2019 was the first year to show some improvement in foreign trade balance since 2009. The deficit fell from (-$28.2) billion to (-$26.4) billion in 2019 and has improved again this year (2020 Q2 YTD) despite falling exports. (Table F).
Of the 195 countries in which the U.S. conducted foreign trade, either exports or imports, the U.S. had a positive trade balance in 127 countries and a negative trade balance in 68. However, the major trading partners, China, Vietnam, and Mexico are still significantly upside down, with U.S. imports considerably larger than exports (Figure 8). The COVID-19 pandemic has definitely been disruptive to foreign trade, but if the virus can stabilize further worldwide in the months to come, the flow of international goods should improve slowly over time. Until then, supply chains to furniture stores and online retailers will continue to experience disruptions and the consumer will become more frustrated with wait times and smaller selections.
July 15,
2020 by HFBusiness Staff in Business Strategy, Industry
As job losses mounted, many consumers cancelled, restricted, or redirected their spending. While the unemployment rate did improve 1.4% in May as stores and companies began the process of reopening, unemployment was 9.7% higher compared to May 2019. In addition, Consumer Confidence was still down 47.5% and the stock market remained wildly unstable. In this article we dive into the impact of three months of the pandemic on consumer spending and retail sales for March, April, and May, comparing the level of impact on different consumer categories. The article also strives to quantify the advantage given to online retailers and brick and mortar stores deemed “essential”, and the devastating impact that advantage has had on brick and mortar businesses forced to close.
The decline in consumer spending for furniture and home furnishings was considerably less than the plummet of retail sales for brick and mortar furniture and home furnishings stores. The difference centers around consumers taking to the internet like never before as well as warehouse price clubs (Sams/Costco) and big box stores (Walmart/ Target) being allowed to stay open while retail furniture stores and other brick and mortar stores deemed non-essential were forced to close. As shown in Table A, with the exception of total retail sales, the steep decline began in March when a majority of the country shut down by mid-month. Propped up by online sites and “essential” brick and mortar retailers, total consumer spending decreased only 6.6% in March, followed by an additional 12.6% drop in April, but rebounded 8.2% in May as businesses began to reopen.
While consumer spending on furniture and home furnishings suffered greatly from March to April (-17.2%), retail sales from furniture and home furnishings stores forced to close dropped a record 50.6% over the same time period. After many closures were lifted in May, sales in furniture and home furnishings stores responded – jumping 98.4% from April to $7.7 billion. And while this jump almost doubled sales over the previous month, May was still 23.4% below May of last year. Consumer spending on furniture and furnishings in all retail channels increased 29.4% in May compared to April. Consumer Spending (All Channels) by Product Type
In March, consumer spending on durable goods stalled almost immediately as most consumers curtailed spending out of either necessity or caution (Table B). Dropping 12.4% the first month of the pandemic, spending on durable goods decreased another 12.4% in April, before jumping 28.6% in May. Due to a massive rise in grocery sales during March as consumers stocked up, consumer spending on nondurable goods increased 3.9% before dropping 14.0% in April. Spending on nondurable goods increased only 7.7% in May. Not surprisingly, as the shelter-inplace orders began, consumer spending on services decreased down 8.9% in March and another 12.2% in April. May increased 5.4%.
Consumer spending on furniture declined 9.5% in March and another 18.3% in April to an annual rate of $99.5 billion. In May, furniture consumption increased 32.8% (Table C) as consumers fled to newly opened stores. Smaller home décor purchases often made over the Internet like clocks, lamps, lighting fixtures, and other household decorative items, still declined 9.5% in March and another 15.9% in April. Numbers in May were up 15.5%. Carpets and other floor coverings fell 17.6% in April and spending jumped 50.4% in May.
Appliances, televisions, and other household consumer purchases also took a major hit during the first months of the pandemic as shown in Table D. Consumer spending on major household appliances fell less than other home products as major home and garden retailers, like Home Depot and Lowes, were able to stay open. Major appliance spending declined 9.3% and 6.2% in March and April before increasing 16% in May. Initially decreasing just 6.2% in March, spending on televisions dropped 11.1% in April before increasing 16.1% in May.
Only falling 3.0% in April, the tools and equipment for the house and garden category fared much better during the quarantine, as many consumers spent time working in their yards, again as building materials and garden stores were deemed “essential” and allowed to remain open. Spending in May was up 12.6%
Consumer spending on personal computers/tablets and peripheral equipment grew 4.6% in March due in part to online learning for students and much of the workforce having to work from home. While spending on telephone and related communication equipment, including cellphones, tanked in April compared to March (-29.7%), consumer spending growth on cellular services remained flat (Table E).
Initially, consumer spending on groceries jumped 23.0% in March before dropping 12.2% in April. Growth eased up in May increasing 3.2% over April. Spending on restaurant and fast food meals declined sharply beginning in March down 25.4% from February and continuing through April (-30.8%). As restaurants opened in May, growth jumped 24.6%. Clothing and footwear, despite the Internet, also took a huge hit as consumers curtailed much of their spending in March and April – down 28.8% and 28.6% respectively. Interestingly consumer spending on newspapers and periodicals did show an increase throughout the pandemic as many people turned to reading as a way to fill their extra time – up 5.5% in March, 10.2% in April, and 10.8% in May.
Retail Sales by Type of Store Overall retail sales were up 3.9% from February to March before falling 12.4% in April. Total sales rebounded in May by 21.9% as stores reopened but were still 3.4% less than May 2019 (Table G). Furniture and home furnishings retailers felt the brunt of store closures in April – dropping over 50% to $3.8 billion in sales. While retail sales were up 98.4% for those stores in May, sales during May 2019 were still 23.2% higher. Non-store retailers (e-commerce and mail order), had positive growth throughout the pandemic as most consumers turned to online shopping. Warehouse clubs and supercenters comprise about 70% of the general merchandise stores category. Not surprising, this category which for the most part was considered “essential” and allowed to keep doors open, increased by 17% in March before decreasing by 14% in April and then evened out in May – up 14%.
With many consumers quarantined and home during March, April, and into May, sales from the “essential” building material/garden equipment retail stores grew exponentially, increasing an average of 16.2% a month, as many turned to yard work and home projects as a way to stay busy (Table H).
During March and April, retail sales for electronics and appliance stores declined sharply – dropping 13.1% and 48.3% respectively as stores remained closed. In May stores were up 61.5% over April, a number still 31% less than May of 2019. Clothing and clothing accessory brick and mortar stores were among the hardest hit by closures with sales decreasing 42.4% in March, followed by a 74.9% decline in April. Sales rebounded 209.2% in May but still 63.3% less than May of the previous year.
As shown in Table I, gas station sales decreased 7.4% in March and another 21.7% in April as a result of people not driving or commuting to work. Sales increased by 20.4% in May but with gas prices low and many people still working from home, gas sales were 31.5% below May 2019. Grocery store sales jumped 32.5% in March as people swarmed the stores to stock up in the early weeks of the quarantine. Sales fell 12.8% in April before increasing 6.2% in May. As restaurants across the country slowly opened, retail sales among food services and drinking places increased by 38.1% in May after dropping 23.8% in March and 36.6% in April.
Looking at the cumulative impact this year through May compared to the first months of 2019, the brick and mortar distribution channels forced to close during the quarantine still have a long way to go to catch up to 2019 (Figure 1). Through May, furniture and home furnishings stores were still 18.1% below 2019. Electronics and appliance stores and department stores fared slightly worse, down 19.3% and 21% respectively. It will be a few months before data is available to quantify how much of E-commerce’s 16.6% May YTD growth furniture and home furnishings were able to capture.
Residential Construction and Sales Not surprisingly, the housing industry also halted during most of March and April, as shown in Table J. Housing permits declined 5.7% in March and 21.4% in April, but did increase 14.4% in May once many state’s shelter-in-place orders were lifted. Housing Starts also dropped dramatically during March and April, falling 19% and 26.4% before increasing by 4.3% in May. New housing completions have yet to show positive growth – still down 7.3% from April to May. New residential sales were down 14.5% in March compared to February, and another 5.2% in April before rebounding in May up 16.6%. Existing home sales continued negative growth over the previous month throughout the three months – March (-8.5%), April (-17.8%) and May (-9.7%).
As we look to the future, the remainder of the year will be hard for furniture stores as factories just restarted in May. The pandemic is still not fully understood and high unemployment will continue as companies work to adjust to the uncertainty. At press time many states were in the midst of a second resurgence of COVID-19 infections. While many consumers still desire and missed the physical act of shopping and going to retail stores, the preceding few months have shown the necessity and power of e-commerce and online ordering. For many consumer products, the online exposure during the first three months of the pandemic will perhaps permanently change shopping habits. But on a positive note, especially for the furniture industry, the consumer appears to have sorely missed the shopping experience.
February 17,
2020 by HFBusiness Staff in Business Strategy, Industry
In 2019, natural increase (births minus deaths) fell to 957,000, marking the first time in decades that it declined below one million, forecasting a trend toward fewer births and more deaths. While birth rates are at historical lows, death rates are rising as Baby Boomers are retiring and aging.
Paired with dropping natural increase rates, international migration to the U.S. (immigration) has decreased to 595,000 people from 2018 to 2019, almost half the amount in 2016 of 1.05 million. Using data from the U.S. Census Bureau, this month’s Statistically Speaking details the factors in the country’s declining population growth by region alongside the impact on the future of the economy and furniture industry.
Population Changes
The annual net increase in the U.S. population peaked in 1992 when the U.S. added 3.53 million people to the population either through natural increase (births minus deaths) or net international migration (immigration) (Table A). Since 2015, when the U.S. added 2.3 million people, the growth rate has fallen to its lowest level in 80 years – reaching less than 1.6 million net change in 2019.
While total population increased only 2.4% in the last four years, births decreased 5% alongside a 5% increase in deaths. Once an offset in the rising low birth rates, immigration dropped 42.8% during the same fouryear period. Figure 1 breaks down the components of population from 2015 to 2019.
Many analysts believe the immigration restrictions started in 2016 combined with a perception that the U.S. has fewer economic opportunities than it did before the Great Recession has caused the decline. These components combined added 1.55 million to the population in 2019 compared to 2.33 million in 2015 – a decline of 6.6%. Economists worry because the growth rate of the economy is traditionally determined by the income growth per capita and population growth. While the impact of slowing population growth can hurt the entire U.S., some regions are already experiencing a decrease in population. As shown in Table B, the Northeast has decreased in population size over the past 2 years – dropping by 0.11% from 2018 to 2019. Overall 10 states decreased in population with West Virginia, Alaska, Illinois and New York topping the list in percent of population lost. Eleven states increased in population over 1%. Idaho, Nevada, Arizona, Utah and Texas were in the top five – with four of those in the West region. Idaho was the only state to reach a growth above 2%. Of the top five states gaining the most people, three of the states are in the South – Texas, Florida, and North Carolina.
Birth Rates
Birth rates continue to decrease every year – down to a rate of 11.6 births per 1,000 population in 2019 from 12.8 in 2011 (Table C). According to the Centers for Disease Control, this is the lowest level since the 1980s, despite an improving economy. Many people are finding it increasingly difficult to afford children. Rising maternity fees, childcare costs, and increasing debt mixed with a static wage growth are causing many people to delay having children and/or having fewer children. Many Millennials claim they have delayed child birth, not by choice, but by economic necessity.
With birth rates at historical lows, only eight states had more births in 2019 than 2018. The top four states with the highest numerical increases were in the Northwest – Utah, North Dakota, Alaska and South Dakota. The lowest birth rates in 2019 occurred in New Hampshire, Vermont, Maine, Connecticut, and Rhode Island – all in the Northeast. But only one state in the nation, Vermont, a low birth rate state, increased its birth rate from 2018 to 2019, but only by 0.8%.
Death Rates
While the birth rate is decreasing in the U.S., the death rate is ramping up – increasing from 8.1 deaths per 1,000 population in 2011 to 8.7 in 2019 (Table D). This rate will increase as more Baby Boomers enter old age. They are projected to make up 20% of the population by 2029, less than 10 years away. As more Baby Boomers head to retirement, the impact on the labor force and consumer spending will increase as employed Boomers have traditionally been high consumers of furniture products. However, retirees produce and contribute less to the economy, and also spend less than younger working consumers.
West Virginia, Alabama, Maine, Mississippi and Pennsylvania had the highest rates of deaths in 2019 – all above 10.4 per 1,000 population. The states with the lowest death rates were Utah, Alaska, Colorado, Texas and California. Utah has half the number of deaths per 1,000 population as West Virginia and Alabama, reflecting the much younger demographic.
Natural Increase
In 2019, natural increase (births minus deaths) fell below 1 million for the first time in decades, due to the aging population of the Baby Boomers. As shown in Table E, the natural increase rate has declined an average of 6% per year since 2011. The majority of states decreased their natural increase rate with only 10 states showing a slight natural increase in population per 1,000 persons from 2018 to 2019. Not surprisingly, younger populated states - Utah, Alaska, Texas – had the highest rates of natural increase.
International Migration
U.S. net immigration levels peaked in 2016 at 1.05 million just as tougher immigration laws were being enacted and have fallen consistently to just over 595,000 in 2019. Over 40 percent of all immigrants in 2019 settled in Southern states, consistent with historical trends (Figure 2).
The total international migration rate dropped 15.2% to 1.8 immigrants per 1,000 population 2018 to 2019 – the lowest level in more than a decade (Table F). With the decline in natural increase, population growth has become more dependent on immigration and the dependency is expected to increase over the next decade. Low immigration paired with falling natural population increase rates point to growing labor shortages and a weakening economy.
Of the 17 states with international migration over 10,000 persons in 2019, only two states received more immigrants than the previous year – California (increasing 3.8%) and Washington state (up 2.1%).
Domestic Migration
The final missing piece to understanding the shifting population demographics is “domestic migration,” the net number of current U.S. residents moving into a state versus the number moving out of state.
Data shows that the percentage of Americans changing residence is at a post-World War II low of 10.1% — less than half the rate the U.S. had in the 1950s and lower than in 1990s. The domestic migration rate continues its negative trends in the Northeast and Midwest, while the South and West attract the highest mobility rates (Table G). For example, in Idaho, for every 1,000 residents, 15.3 moved into Idaho in 2019 – the highest domestic migration rate within the U.S. Nevada, Arizona, South Carolina and Delaware completed the list of the top five states with highest domestic migration rates. Conversely, in the Northeast, in 2019 for every 1,000 population, a net of 5.3 people left the region. In the Midwest, the net domestic migration was -2.4 persons per 1,000. The impact of negative domestic migration on some states discussed here may seem insignificant, but compounded over time and coupled with low birth rates, high death rates, and low immigration can have large economic consequences in the future. Note that city migration rates will not be available from the Census Bureau for a few months.