A snapshot of today’s top-spending furniture consumers looks to be high-earning married couples, in their late 30s and early 40s with young children, living in urban areas. Using data from the 2017 Consumer Expenditure Survey, this is the first factoid in a series of four factoids delving into key household characteristics – age, income, marriage/children status, occupation, population, and region.
Age and Income
Ages 35 to 44 spent an average of $663 per furniture expenditure in 2017 – the highest of the age groups. 54 percent of these older Millennials and younger Gen Xers are homeowners. Many older millennials are just now settling down, making more money, purchasing homes and buying furniture. Some of the younger Millennials (Ages 25-34) are also contributing to higher furniture expenditures. At an annual average of $538, ages 25 to 34 are spending more per purchase than ages 45 to 54 ($517).
Not surprisingly, consumers that earn more money tend to spend more on their furniture purchases. High income earners spent three-times to four-times the level of middle class house households in 2017. The jump among higher income households – those earning above $100,000 – is quite dramatic. Households with incomes between $150,000 to $199,999 spend an annual furniture expenditure average of $1,132 compared to $700 for those earning between $100,000 and $149,999 – a 61.7 percent increase.
Methodology: The CE versus the PCE
There are currently two U.S. Federal series of data that refer to household expenditures. One is produced by the Bureau of Labor Statistics, using the Consumer Expenditure Survey (CE), and the other is produced by the Bureau of Economic Analysis, Personal Consumption Expenditures (PCE). The information in the article reflects data from the CE. The CE is the only Federal household survey to provide information on the complete range of consumers' expenditures and incomes, as well as the characteristics of those consumers. It is published semi-annually with 2017 year end the most current. The PCE, which measures national consumer spending, is published monthly by the Bureau of Economic Analysis and is the main workhorse that drives economic growth. Much research continues to be done on the differences in the final estimates of consumer spending between the CE and the PCE. In terms of furniture expenditures the CE always reflects a lower average household expenditure which in 2017 calculated at a ratio of .63 versus the PCE.
Source: Consumer Expenditure Survey 2017, Bureau of Labor Statistics, which in 2017 calculated at a ratio of .63 versus Personal Consumption Expenditures published by the Bureau of Economic Analysis (see methodology box below “ Methodology: The CE versus the PCE”
Consumer spending on furniture increased 7 percent last year outpacing the growth of all other broad home furnishings goods categories with sales of $114.6 billion in sales. Despite promising growth, all home furnishings goods continue to lose consumer dollars to spending on services including healthcare, rents and mortgages. This is the final factoid in a series of five factoids detailing consumer spending across all spending categories in 2018.
Major household appliances is the second largest home furnishings spending category at $41.4 billion, followed by clocks, lamps, and lighting fixtures at $39 billion and televisions at $31.7 billion.
Although window coverings is the smallest of the home furnishings categories, it has experienced the largest post-recession surge in consumer spending – increasing 67.7 percent since 2007.
Spending on carpets and other floor coverings, the most affected home furnishings category, has slowly increased since 2012 but still shy of 2007 expenditures. As of November 2018, spending on furniture is 13.7 percent higher than pre-recession amounts in 2007.
All home furnishings categories except for televisions exceeded 3 percent average annual growth from 2011 to 2016. Spending on televisions had an average loss of (-0.2 percent) over five years but has rebounded slightly – increasing 4.3 percent last year. By far, furniture and window coverings have shown the most consistent growth from 2011 to 2018
Source: Personal Consumption Expenditures, Bureau of Labor Statistics *Seasonally Adjusted at Annual Rate (SAAR), 2018 through November
Bedding sales in the second quarter of this year were impacted by a considerable slowing of imports. 2019 Q2 sales increased 1.6% growth compared to the same quarter last year. Sales of $3.71 billion were also down 9.7% versus 2019 Q1.
Bedding sales have struggled the last 9 quarters, and growth continues to be slow quarter over quarter. This comes in the midst of a general slowing of total furniture industry. The second quarter of this year grew 1.6% over the same quarter 2 in 2018.
2019 Bedding sales for the first half of the year totaled $7.82 billion, up 2.4% over the first half of last year.
Source: Impact Consulting Services, Inc. industry model *2019 q2 is preliminary.
Following high growth in the furniture industry in first part of last year, the fourth quarter of 2018 softened, and that slowing has continued through the first half of this year. Combined Furniture and Bedding sales grew only 2.5% in the second quarter versus the same quarter in 2018. Compared to the previous quarter, 2019 Q1, second quarter sales were up 4.8% totaling $27.35 billion.
Furniture (excluding Bedding) in the second quarter increased 2.6% versus the same quarter 2 in 2018 reaching $23.64 billion. Compared to the first quarter of 2019, Furniture sales were up 7.5%.
On the heals of weaker imports, initial estimates indicate Bedding sales in the second quarter increased 1.6% compared to 2018 Q2 but were down 9.7% over the first quarter this year. Sales are projected to be $3.71 billion in Q2.
For the third straight quarter, growth in furniture and bedding industry sales has slowed. Compared to the same quarter of last year, furniture and bedding sales of $27.35 billion reflect an increase of 2.5% over 2019 Q1. Compared to the first quarter of this year sales are up 4.8%.
Furniture (excluding Bedding) increased 2.6% percent in 2019 Q2 versus the same second quarter of 2018 with sales of $23.64 billion. This figure is up 7.5% over last quarter, 2019 Q1.
Last quarter (2019 Q1) Bedding rebounded slightly up 3.1% compared to 2018 Q1. However slowing imports in the second quarter held growth to an early estimate of 1.6% compared to 2018 Q2 and a decline of 9.7% compared to the last quarter, 2019 Q1. Second quarter Bedding sales totaled $3.71 billion.
Industry sales for the first half of 2019 totaled $53.44 billion, an increase of only 2.5% over the same period last year, signaling a slowing of the industry for the third straight quarter.
Source: Impact Consulting Services, Inc. industry model
Overall, personal consumption expenditures have risen 41.6 percent post-recession with the majority of consumer spending – roughly two-thirds – absorbed by services and the amount increases every year. This is the fourth factoid in a series of five factoids detailing consumer spending across all spending categories in 2018.
Housing and Household Expenditures
Since the recession, renter-occupied housing has surged as the fastest growing housing expense – up 86.4 percent since 2007. Both household insurance and owner-occupied housing expenditures have also grown at a fast pace, increasing by 40.8 percent and 47.5 percent respectively. Major household appliances have shown steady growth, while televisions have fallen flat and outpaced by other household spending. Surprisingly, tools and equipment for house and garden have skyrocketed the last few years – jumping 43 percent since 2012.
As Americans are staying put longer, household maintenance spending has grown an average of 4.8 percent a year from 2011 to 2016. 2016 to 2017 saw a dip (-0.8 percent) in housing maintenance but the numbers picked back up last year – growing 3.8 percent. Last year, rents and mortgages both saw a high growth of 4.5 percent and 4.4 percent as supply continues to tighten in many areas. Furniture has shown the most growth over the past year, rising 7 percent after an average yearly increase of 4.6 percent from 2011 to 2016.
Source: Personal Consumption Expenditures, Bureau of Labor Statistics