Home Furnishings Prices Continue Four Year Decline All Consumer Items and Broad Consumer Item Category

March 3, 2017   by Jane Chero in General   

This is the first factoid in a series of five factoids detailing the decline of prices among Furniture and Home Furnishings as well as many other major consumer items. The prices of consumer items grew steadily coming out of the recession for virtually all broad product categories until 2012 to 2014, when Durable Goods, including furniture, appliances, and electronics, along with Non Durables, and Commodities began to decline.  The Services sector, led by skyrocketing medical costs, is the only broad group continuing to see large price increases.

According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) for all consumer items increased 9.9 percentage points over the last six years – an average of 1.6 percent a year. Meanwhile, the purchasing power of the dollar decreased with time – declining 9 percentage points since 2010.

Durable Goods has been the worst performing sector in price growth compared to Non Durables, Services, and Commodities. Durable Goods prices grew slightly coming out of the recession, but began declining in 2012, and this year is 3.3 percentage points below 2010. With a constant upward trajectory, the price all of consumer Services has increased 14.4 percentage points from 2010 to 2016 –due in part to escalating medical costs.

Source: Consumer Price Index, Bureau of Labor Statistics *2016 data through 3rd quarter

Interpreting the CPI: The Consumer Price Index is defined by the Bureau of Labor Statistics as the measure of the average change overtime in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI-U (Consumer Price Index – Urban Consumers) represents all urban consumers, about 89 percent of total U.S. population. This article focuses on the Consumer Price Index from 2010 to 2016.  To interpret the CPI note that the base year indexes is always shown as 100.  The index for subsequent years indicates the percentage growth over that base year.  For example, an index in the year 2013 of 119.3 indicates the price of that consumer item has grown 19.3 percent since the base year of 2010. On the other hand, an index of 86.2 indicates the price of that item has fallen 13.8 percent.  Each year represents the growth over the base year.

A Disappointing 3rd Quarter for the Furniture Industry Housing Starts Percent Growth by Quarter

February 24, 2017   by Jane Chero in General   

This is the final factoid in a series of five factoids detailing the weakened 3rd quarter of 2016. The first quarter of 2016 in the furniture and bedding industry started off continuing the 5 percent plus growth over the previous year for all quarters in 2015. But as the year wore on, subsequent quarters did not perform to those levels. Quarter two fell to 3.7 percent growth and quarter three fell to 3.0 percent growth over quarter the same quarters of 2015. Year-end sales in 2015 totaled $92.5 billion. Third quarter year-to-date industry sales reached $71.5 billion, a 3.0 percent increase over the first three quarters last year.

The furniture industry, aside from demographics, is driven by economic influencers and catalysts – detailed in factoids two and three of this series. Continuing from the fourth factoid, this factoid expounds on the housing market and its possible correlation with the furniture industry by focusing on the quarterly growth of Housing Starts.

Despite the strong third quarter in new home sales, housing starts did not keep up the momentum. Single-family unit starts increased by only 1.9 percent from 2015 Q3 to 2016 Q3. Third quarter annualized starts totaled 759,000 single-family units. On a positive note, September starts were at the highest level since last February and the year should end with over 13 percent growth.

For multi-family units, the picture is not so bright. After a flurry of building in 2014 and 2015, starts are off significantly in the 3rd quarter of 2016. While the first quarter of 2016 experienced 5.2 percent growth, the second and third quarters have posted negative growth of 9.5 percent and 7.7 percent respectively.

Source: U.S. Census Bureau

A Disappointing 3rd Quarter for the Furniture Industry Housing Industry Percent Growth by Quarter

February 17, 2017   by Jane Chero in General   

This is the fourth factoid in a series of five factoids detailing the weakened 3rd quarter of 2016. The first quarter of 2016 in the furniture and bedding industry started off continuing the 5 percent plus growth over the previous year for all quarters in 2015. But as the year wore on, subsequent quarters did not perform to those levels. Quarter two fell to 3.7 percent growth and quarter three fell to 3.0 percent growth over quarter the same quarters of 2015. Year-end sales in 2015 totaled $92.5 billion. Third quarter year-to-date industry sales reached $71.5 billion, a 3.0 percent increase over the first three quarters last year.

The furniture industry, aside from demographics, is driven by economic influencers and catalysts. The previous two factoids detail two year quarterly growth of the Gross Domestic Product, Payroll Employment, and Consumer Price Index, Unemployment Rates and Consumer Confidence. The final two factoids will focus on quarterly growth of the  Housing Industry and it’s tie into the Furniture Industry. Nothing impacts furniture industry growth perhaps more than home sales both existing and new.

Existing Home Sales. Home re-sales experienced healthy first and second quarters this year growing 5.0 and 4.2 percent from 2015. However, 2016 Q3 dropped 0.4 percent from 2015 Q3. At an annualized rate, third quarter existing home sales totaled 5.3 million units.

New Home Sales. Part of the third quarter decline in existing home sales this year is offset by new single-family home sales that surged 23.1 percent in the third quarter to an annualized rate of 599,000 units. After double-digit growth in 2015, 2016 year started with very slow growth in the first quarter of 1.6 percent. The second quarter rebounded, however, to 14.5 percent increase followed by the third quarter surge.

Source: *National Association of Realtors; **U.S. Census Bureau

A Disappointing 3rd Quarter for the Furniture Industry - Unemployment Rates and Consumer Confidence

February 10, 2017   by Jane Chero in General   

This is the third factoid in a series of five factoids detailing the weakened 3rd quarter of 2016. The first quarter of 2016 in the furniture and bedding industry started off continuing the 5 percent plus growth over the previous year for all quarters in 2015. But as the year wore on, subsequent quarters did not perform to those levels. Quarter two fell to 3.7 percent growth and quarter three fell to 3.0 percent growth over quarter the same quarters of 2015. Year-end sales in 2015 totaled $92.5 billion. Third quarter year-to-date industry sales reached $71.5 billion, a 3.0 percent increase over the first three quarters last year.

The furniture industry, aside from demographics, is driven by economic influencers and catalysts. The previous factoid detailed 2 year quarterly growth of the Gross Domestic Product, Payroll Employment, and Consumer Price Index. This factoid focuses on possible influences of Unemployment Rates and Consumer Confidence.

Unemployment Rate

Over the last five years, the Unemployment Rate has declined rapidly – dropping from 9 percent to 5 percent. From 2011 to 2015, the third quarter each year has decreased an average of 1.0 percentage points. Although only slightly moving 0.2 percentage points from 2015 Q3 (5.2 percent) to 2016 Q3 (5.0 percent), employment is now at pre-recession levels.

Consumer Confidence

Consumer Confidence has not moved more than 6 points in any quarter over the last two years hovering from 95 to 101. A confidence level of 100 usually indicates neither extreme confidence nor lack thereof. The year 1985 was chosen by the Conference Board as the base index of 100 because that the year showed neither a peak nor trough in the business cycle. Consumer Confidence was at its highest in the year 2000 at 139. Conversely, Consumer Confidence was at its lowest of 39 at the bottom of the last recession in 2009.

Source: *U.S. Bureau of Labor Statistics;  **Conference Boards Consumer Confidence Index, 2016Q4 includes only October

A Disappointing 3rd Quarter for the Furniture Industry - Economic Influences and Catalysts Percent Growth by Quarter

February 3, 2017   by Jane Chero in General   

This is the second factoid in a series of five factoids detailing the weakened 3rd quarter of 2016. The first quarter of 2016 in the furniture and bedding industry started off continuing the 5 percent plus growth over the previous year for all quarters in 2015. But as the year wore on, subsequent quarters did not perform to those levels. Quarter two fell to 3.7 percent growth and quarter three fell to 3.0 percent growth over quarter the same quarters of 2015. Year-end sales in 2015 totaled $92.5 billion. Third quarter year-to-date industry sales reached $71.5 billion, a 3.0 percent increase over the first three quarters last year.

The previous factoid detailed quarter growth from 2015 to 2016 of Furniture Industry Sales, Furniture Store Sales, and Personal Consumption Expenditures. This factoid focuses on economic influences and catalysts: Real GDP, Payroll Employment, and Consumer Price Index.

Real GDP. The furniture industry, aside from demographics, is driven by economic influencers and catalysts. Gross National Product, the measure of goods and services in the U.S., is chief among them. Real GDP growth has continued to decline since the first quarter of 2015 when growth was at 3.3 percent. Growth in 2016 has been steady, but slow, with quarterly averages between 1.3 percent and 1.6 percent.

Payroll Employment. The number of employed workers (non-farm) was at its highest level in history in October 2016 at 149 million. However, employment growth this year has slowed throughout each quarter. In 2015 growth averaged 2.1 percent year over year, but has fallen to an average of 1.4 percent increase in October 2016.

Consumer Price Index. For furniture and bedding, prices have been relatively stable, falling less than 1 percent from the prior year’s quarter, until the second quarter of this year.  In 2016 Q2 prices were down 2.8 percent and in 2016 Q3 down 3.1 percent.

Source: *Bureau of Economic Analysis, U.S. Dept of Commerce; **U.S. Census Bureau, Not seasonally adjusted, 2016Q4 includes only month of October; ***U.S. Bureau of Labor Statistics, Seasonally adjusted

A Disappointing 3rd Quarter for the Furniture Industry

January 27, 2017   by Jane Chero in General   

This is the first factoid in a series of five factoids detailing a weakened 3rd quarter of 2016. The first quarter of 2016 in the furniture and bedding industry started off continuing the 5 percent plus growth over the previous year for all quarters in 2015. But as the year wore on, subsequent quarters did not perform to those levels. Quarter two fell to 3.7 percent growth and quarter three fell to 3.0 percent growth over quarter the same quarters of 2015. Year-end sales in 2015 totaled $92.5 billion. Third quarter year-to-date industry sales reached $71.5 billion, a 3.0 percent increase over the first three quarters last year.

These numbers reflect a weakening furniture store sales growth (which includes lifestyle retailers) and are in line with the government’s reports of personal consumption expenditures. Retailers are hoping for a bump in consumer confidence in the fourth quarter to help ramp up growth.

Furniture stores, which include all lifestyle furniture retailers, posted a dismal 1.3 percent increase in the third quarter of this year compared to the same quarter in 2015. Retail store sales are at an average quarterly growth of 3.2 percent – down from a 5.7 percent growth (2014 to 2015). Furniture Store sales increased from $14.3 billion in the second quarter of 2016 to $14.9 billion in quarter three, an increase of 4.3 percent.

Personal Consumption Expenditures for furniture also experienced a third quarter slump this year – increasing 2.1 percent over the same period in 2015. Over the previous six years, third quarter year-over-year growth averaged 4.4 percent. The next factoid will focus on Economic Influences and Catalysts. 

Source: Impact Consulting Services, Inc., Furniture Core Industry Model; U.S. Census Bureau, Monthly Retail Trade Survey, 2016 Q3 July/August are actual – September has been estimated

Generation X Might Not Be a Bust After All - Homeownership and Furniture Expenditures

January 20, 2017   by Jane Chero in General   

This is the final factoid in a series of four factoids focusing on Generation X. Historically named the “Baby Bust Generation,” babies born between 1966 and 1981 are now 35 to 50 years old. Sandwiched between the Baby Boomers and Millennials, Generation X is often overlooked by media and marketers as a worthy target – instead focusing on upcoming Millennials and their future economic influence. Once considered too small in size to make an impact, Generation X is now almost 70 million strong and is the largest generation of consumers alive ages 21 to 65.

Homeownership: GenXers have followed the Baby Boomers in their love of homeownership but were temporarily stymied by the recession. Homeownership among all three GenX age is now well above 50 percent with 61.6 percent of 40 to 44 year olds owning a home and 68 percent of 45 to 49 year olds. With homeownership rates bouncing back, Generation X has dramatically increased furniture spending.

Furniture Expenditures: Last year saw a dramatic increase in furniture expenditures by GenXers according to the government’s Consumer Expenditure Survey. The heart of GenXers (ages 35 to 44) is spending the most on furniture of any consumer group averaging $672 annually. This survey reflects about 55 percent to 60 percent of furniture expenditures.

With the Baby Boomers aging out of prime buying years and the Millennials still pouring into adulthood, Generation X is the here now for the furniture industry. Industry leaders should keep their focus on this bread and butter generation that may just be the consumers that transition our industry toward real prosperity.

Generation X Might Not Be a Bust After All Children and Education

January 13, 2017   by Jane Chero in General   

This is the third factoid in a series of four factoids focusing on Generation X. Historically named the “Baby Bust Generation,” babies born between 1966 and 1981 are now 35 to 50 years old. Sandwiched between the Baby Boomers and Millennials, Generation X is often overlooked by media and marketers as a worthy target – instead focusing on upcoming Millennials and their future economic influence. Once considered too small in size to make an impact, Generation X is now almost 70 million strong and is the largest generation of consumers alive ages 21 to 65.

These 35 to 50 year olds also have over 50 percent of the children under 18 – further extending their buying power. With homeownership rates up and furniture expenditures at their highest in years for ages 35 to 44, Generation X is poised to make a significant mark through over the next five years and beyond.

Children:  GenXers ages 35 to 50 are in their prime family purchasing years for both themselves and their families. Over half (52.9 percent) of children 65.7 million children under 18 reside in GenXer homes. Over 80 percent of those Generation X households are married couples.

Education:  GenXers are only slightly less educated than the younger Millennials with 35.7 percent attaining bachelor’s degrees or higher.  For 35 to 50 year old GenXers, 38 million have some college of higher degree. The final factoid in this series will detail homeownership and furniture expenditures among Generation X.

Source: U.S. Census Bureau, America’s  Families and Living Arrangements, Current Population Survey

Generation X Might Not Be a Bust After All Household Median Income

January 6, 2017   by Jane Chero in General   

This is the second factoid in a series of four factoids focusing on Generation X. Historically named the “Baby Bust Generation,” babies born between 1966 and 1981 are now 35 to 50 years old. Sandwiched between the Baby Boomers and Millennials, Generation X is often overlooked by media and marketers as a worthy target – instead focusing on upcoming Millennials and their future economic influence. Once considered too small in size to make an impact, Generation X is now almost 70 million strong and is the largest generation of consumers alive ages 21 to 65.

GenXers are in their prime earning years. As Baby Boomers retire more high paying jobs will open up to experienced and ready GenXers. In 2015, median income was the highest for Generation X 45 to 49 year olds at $76,095, followed by 40 to 44 year olds at $72,143. In addition, the youngest of the GenXers, the 35 to 39 year olds, had the fastest growing incomes last year with median income increasing 9.2 percent over the previous year. The next factoid focuses on the education and children of Generation X.

Source: U.S. Census Bureau

Generation X Might Not Be a Bust After All Population Comparison Among Generations

December 30, 2016   by Jane Chero in General   

This is the first factoid in a series of four factoids focusing on Generation X. Historically named the “Baby Bust Generation,” babies born between 1966 and 1981 are now 35 to 50 years old. Sandwiched between the Baby Boomers and Millennials, Generation X is often overlooked by media and marketers as a worthy target – instead focusing on upcoming Millennials and their future economic influence. Once considered too small in size to make an impact, Generation X is now almost 70 million strong and is the largest generation of consumers alive ages 21 to 65.

At 69.8 million, GenXers trail behind both Millennials and Baby Boomers in size, but the current adult population of Generation X is higher than the Millennial’s 66 million as many are still under the age of 18. While GenXers are still smaller than the living Baby Boomers (74.9 million), they now have more buying power.

The population of the “Baby Bust Generation” is now much larger than originally projected due to immigration. With 58.5 million births between 1966 to 1981, Generation X has grown by almost 20 percent (19.3) in numbers. Although smaller in total population, GenXers are the largest adult consumer population at 37.5 percent of adults ages 21 to 65. The next factoid will focus on the income of Generation X as they enter their prime earning years.

Source: U.S. Census Bureau