The bump in consumer buying activity following November’s election raised hopes that the industry’s post-pandemic struggles might finally be nearing their end. Many retailers reported solid, in some cases, downright strong fourth quarters that were often enough to turn around what had been a down year.
January saw some leveling but not enough to undermine what appeared to be growing optimism among industry executives. Furniture Today’s newly released Home Furnishings Sentiment Index, based on surveys conducted in January with executives across the full spectrum of the home furnishings industry, revealed industry optimism around three key metrics: 2025 sales projections, expectations for the coming six months and expectations for consumer demand.
In all three forward-looking areas, a substantially higher number of executives expressed positive expectations than negative.
Last week’s stunning Consumer Confidence numbers could undermine those perceptions and threaten to blunt whatever small momentum the industry has been building. The seven-point drop in the Consumer Confidence Index for February was the largest since 2021, a drop that at the time served as a harbinger of declining sales to come.
Even more concerning was the 9.3-point decline in the Consumer Expectations Index. Based on consumers’ short-term outlook for income, labor and market conditions, the 72.9-point ranking for the month was well below the 80-point threshold that often signals a pending recession. Furniture and bedding industry veterans will remember spending most of 2023 hearing about the prospects for a coming recession, one that fortunately did not materialize at that time.
The prospect of a recession appears to have emerged again with consumers themselves expressing concern in the most recent survey. According to the Conference Board, “the proportion of consumers anticipating a recession over the next 12 months increased to a nine-month high,” fueled by resurging fears of inflation.
On a more positive note, purchasing plans for homes continued to recover, and spending priorities appear to be shifting away from vacation and travel toward things like personal and health care, movies and live entertainment. While none of that directly impacts the likelihood of increased furniture sales, it is heartening that the discretionary dollars that had previously been shifted from home to vacation and travel could at least be in play again.
While it is too soon to draw definitive conclusions from the most recent data, the dramatic shift in February highlights the volatility that continues to define the marketplace and the environment in which furniture retailers and manufacturers must compete.
If that continues, then the flexibility that companies developed over the past several years to combat the near constant shifts caused by the COVID-19 pandemic and its aftermath could serve them well in what could be a period of dramatic shifts in the global and domestic marketplace.
It appears that, for the foreseeable future, the only certainty remains uncertainty.
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