Furniture forecast: 2009 will end on an upswing
Jerry Epperson -- Furniture Today, April 25, 2009
Want to have some real fun? Want to feel much better? Read 14 economic forecasts, contrast their expectations, and attempt to reach a consensus. When you finish, you feel so much better, knowing you don't have to do it again for a while.
An economist, by definition, is someone who does not mind being wrong all the time while we analysts accumulate huge quantities of detailed information, only to never reach any conclusion, unless it agrees with what we thought when we started.
Any forecast deals with uncertainty because the economy often finds a way of keeping you humble. Please have some sympathy for those of us who have to put our forecasts in writing so everyone can remind us where we went wrong. We would much rather just say it out loud so we could deny it later, just like our politicians.
For perspective, the furniture and mattress sectors have just survived six months of double-digit declines in furniture store sales, mattress factory shipments, and furniture shipments. In the fourth quarter of 2008 — the most recent numbers available — domestic wood furniture shipments dropped 25.7% with imports down 14.2%. Not to be denied equal horror, domestic upholstery shipments fell 23.7% and imports dropped 17.2%. Even mattress shipments were off 22.8%.
Looking at the public companies' most recent quarters, furniture manufacturers had an average revenue decline of 22.8%, furniture retailers were off 20% and mattress manufacturers fell 24.6%.
The only high point (as we get ready for High Point) was wood furniture shipments from Vietnam, which grew a lucky 13%. If you like graphs that go up, you can also use unemployment and federal deficits.
Through shrapnel and smoke, we have calculated our forecast. We believe the worst has passed, that deflation in furniture prices will continue through 2009, that everyone's product mix will continue to shift towards "value" and that the severe declines will end this summer. This should lead to modest positive gains in the last four months of 2009.
We also believe that 2010 will be stronger than most expect as the stimulus efforts begin to gain momentum, home prices firm, existing home sales rally and as the consumer feels more secure with their investments and jobs. Even so, we doubt employment and new home construction will recover until late 2010 or into 2011.
One more thought: Most of us have cut costs and braced for the worst. It may be time to prepare for recovery!
