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From Home Furnishing Business

Statistically Speaking: 2019 Ends a Year of Slow Steady Economic Growth As 2020 Begins on an Optimistic Note

Overall the U.S. economy ended 2019 with slow, but steady growth and looks to begin the New Year on a cautiously optimistic note. Many analysts believe continued healthy consumer spending will prop up the economy enough that if the U.S. has a recession, it will be short lived.

The Chinese trade war has caused many companies to become hesitant and cautious during 2019 with many consumers sharing the same concerns. At press time rumblings of a possible trade war truce could ease some future fears. Forecasters surveyed in November by the National Association of Business Economics put the odds of recession this year at 47%, down from 60% in the spring. This month’s Statistically Speaking will highlight 2019 yearend economic indicators and point to a hopeful 2020.

U.S. Economic Indicators

As shown in Table A, GDP growth continues to be slow but stable – showing increases every quarter in 2019 through Q3, the most recent data at press time. Many indicators slowed in the second quarter of 2019 and declined, most notably U.S. imports and exports, as companies began to grapple with the longer-term repercussions of the tariff wars. Imports slowed in the Q2 2019 – decreasing 2.8%, while exports took a downturn in the third quarter – dropping 5.9%.

But the consumer shrugged off the negative economic news with slow but steady spending, up 2.9% in Q3 2019. Private residential investment, which has consistently fallen in 2018 and through the first half of 2019 found its footing in the third quarter, growing 5.1% Additional economic indicators from the Bureau of Labor Statistics (Figure 1) show the unemployment rate remaining low – fluctuating around 3.6 for most of 2019 and finishing November at 3.5. Average hourly earnings continued to slowly rise each month – increasing from $27.82 in May to $28.29 in November. Prices indexes, both consumer and producer showed virtually no growth. And not surprisingly the U.S. Import Index has showed negative fluctuations due to the ongoing trade war with China, but finished November at 0.2.

Personal Consumer Expenditures

Personal consumption expenditures have maintained growth throughout 2019, despite business’ pulling back over trade war concerns and a slowing global economy. Spending on both services and durable goods have propelled positive growth (Table B). Consumer spending on healthcare and housing increased above 4% every quarter in 2019 compared to 2018. Among the biggest losers in the battle for the consumer dollar are motor vehicles and gasoline which dropped dramatically from 2018, along with clothing and footwear that showed only slight growth.

After a disappointing first quarter in 2019, the second quarter posted good growth in all major spending categories before slowing in the third quarter and through October of Q4 (Table C). At press time, data from Adobe Analytics estimates that the sales for the full weekend (Thanksgiving through Cyber Monday) topped $29 billion, or 20% of total revenue for the full holiday season, up from 19% last year. Many retail tracking analysts reported brick and mortar traffic down and mobile phone shopping significantly up.

As shown in Table D, spending on furniture increased each quarter in 2019 over the same period in 2018. All categories of furnishings and durable household equipment maintained positive growth with the exception of carpets and other floor covering – dropping 0.6% in 2019 Q2 and major household appliances down 0.1% in the first month of Q4 2019.

Furniture and furniture accessories (clocks, lamps, lighting fixtures, and other household decorative items) both outperformed all U.S. durable goods in 2019 (yearto-date through October) with strong growth in the second quarter (Table E). Retail Sales by Home Furnishings Outlet Total U.S. retail sales, including brick and mortar stores and Internet shopping, were up each quarter in 2019 over the previous year’s quarter. Starting out 2019 with just 1.8% growth in the first quarter over 2018, each quarter followed with increases over 3% (Table F).

After increasing by 6.3% in 2018, furniture store sales were down 2.4% in the first quarter of 2019 compared to Q1 2018, while home furnishings store sales also declined 0.9%. Furniture store sales were the first to pick up – increasing 0.4% in Q2 2019. Home furnishings store sales began to show a positive change over 2018 in the third quarter of 2019 – increasing 0.9%. October sales were up 3.9% for furniture stores and 0.6% for home furnishings stores (Table F).

The much higher reported increases in personal consumption expenditures for furniture products and home furnishings emphasize the pinch retail furniture and home furnishings stores are feeling from online retailers and big box stores. E-commerce shopping for all products, including furniture and home furnishings continued double digit growth throughout 2019. Meanwhile, the biggest home furnishings retail loser, electronics and appliances stores, saw sales drop 2.9% to 5.2% every quarter in 2019 compared to 2018.

Table G details the other major types of retail sales categories. Retail sales of electronic shopping and mail-order houses continue to skyrocket as more consumers turn to online shopping. On the flip side, department stores (excluding discount department stores) continue to plummet – down 12.1% in 2019 Q2 and 10.9% in 2019 Q3. Although discount department stores also show negative growth, warehouse clubs and superstores have posted slow growth each quarter in 2019 over the same quarters in 2018.

Consumer Price Index

The Consumer Price Index (CPI) rose last November by 2.1% compared to November 2018, but was down 0.1% versus October of 2019. Many Furniture and Home Furnishings product categories increased their year-overyear prices from Nov. 2018 to Nov. 2019 with the exception of Floor Coverings, Window Coverings and Major Appliances. Exactly how much of this increase is associated with the Chinese tariff trade war is unknown, but portions of the tariff increases have been passed along to the consumer. However, compared to October, month-to-month November CPI growth declined less than 1% in all home furnishings categories, except for Window Coverings which increased slightly and Major Appliances which fell 2.9%. (Table H).


Although housing inventory in 2019 has been slow to keep up with demand, both new single-family home sales and existing home sales increased from January to October. Existing home sales grew from 4.93 million to 5.46 million, while new single-family home sales increased from 644,000 to 733,000 (Table I).

Housing starts have fluctuated throughout the year – peaking at 1.38 million in August, while completions dipped in September down to 1.14 million before finishing October at 1.26 million. The most promising outlook for 2020 is building permits took a significant leap in October to 1.461 million permits, the highest of 2019 (Table J).

Imports and Exports

Partial import data from the fourth quarter of 2019 showed October imports of furniture and bedding posting the ninth straight year-overyear monthly decline falling 10.5% over October 2018. Compared to the previous September, October one-month imports increased 3.1% primarily due to the surge from Vietnam. Chinese imports of furniture and bedding fell 37.4% over October 2018 and a one-month September to October decline of 6.6%. Outsourcing to Vietnam, Malaysia, Taiwan, Indonesia, and Cambodia has been evident as these countries have increased imports.

Trump announced mid-December of 2019 a “Phase One” deal that shelved new tariffs on $160 billion of Chinese smartphones, electronics and other goods that had been set to take effect before Christmas. He also cut the tariff to 7.5% from 15% on another $120 billion in Chinese goods. As the trade deal moves further along, a future issue will look more closely into the impact this war has had on the furniture industry and what temporary and permanent steps U.S. companies have taken to protect themselves against future wars.

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