A prediction for the upcoming year
Heath E. Combs -- Furniture Today, December 4, 2013
It's that time again. Twice a year I have to find the best economic outlooks and blend them into a furniture and mattress forecast. This is not fun. Trust me.
Reading economic forecasts and seeing different educated opinions is not bad, but trying to figure out what is going on in Washington and then how it will impact the economy is mindwarping.
Even so, anything is easier than trying to forecast in an economic free-fall as we had to do in the late 2008 or after the September 11, 2001, attacks.
Truthfully, while there is a lot of whining about the economy, most of our industry's key inputs are positive, a rare occurrence.
Housing continues to improve. Starts in the September quarter were up 19% year-toyear, with permits +11%, completions +12.1%, new home sales +12.6%, existing home sales +13.2% and private residential construction spending +18.7%.
While not the 20% level seen in earlier this year, these are versus improving housing numbers in the second half of last year. The mix of home sales is better, too. Distressed home sales are 12.0% of the total, half the level a year ago. Home prices are 11.7% above year ago and should encourage more home sellers.
Housing starts will exceed 1 million units next year and existing home sales will near 5 million units, both almost to prerecession levels.
We added more than 200,000 jobs since last month, a level we have been hoping for since the recession. While we doubt the unemployment rate will fall below 7% this year, job creation is picking up, finally.
GDP (first guess) was +2.8% in the September quarter, up from +2.5% in the earlier quarter. Back-to-back 2% GDP gains have been hard to find recently and 3% GDP growth is expected by many economists in 2014.
The federal deficit is way too high but the decline in war spending plus the growing economy are causing it to lessen.
Inflation remains low, as do interest rates. While mortgage rates are up to 4.3%, no one should complain.
Consumer confidence is well above recession levels, but bouncing in reaction to the latest health care debate, scandal, threat or bluster from Washington. The feared government shutdown turned out to be a yawn and other brinkmanship has grown stale with American consumers.
After a horrible start in the first quarter of the year, furniture and mattress sales have been getting better, although not for everyone everywhere. For the year, 2013 will turn out to be respectable, not the disaster it seemed in March.
I cannot guarantee you a much better 2014, but I expect it to show further furniture and mattress gains as consumers finally get around to spending on their homes. Thank heavens.
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