AKTRIN's Monitor For American Consumer Spending On Furniture And Bedding

Furniture World Magazine

Real gross domestic product in the United States increased at an annual rate of 5.5 percent in the first quarter of 1998, or by $100.1 billion. Growth in the second quarter was much slower, namely 1.6 percent or $30.2 billion. The principal reasons for the slowdown can be found in sagging export sales and overstocked inventories by businesses. Housing affordability remains favorable as the average price for homes hardly advanced during the past 12 months. Sales of new one-family houses are still well above levels achieved in 1997. Nevertheless, housing sales follow the general economic trend and have started a modest decline in recent months. For 1998 as a whole we expect housing sales to amount to 865,000 compared to 804,000 last year. Real personal consumption expenditures increased by 6% in the first half of 1998. Consumer expenditures decelerated at a much lesser rate than the economy as a whole. It seems that - up to the middle of this year - consumer confidence remained relatively high and unaffected by unfavorable economic variables. The collapse of the stock market in August has changed this situation. The massive wealth erosion is likely to cast a shadow on forthcoming consumer expenditures. Big ticket, durable consumer goods will be particularly affected. We predict that real personal consumption will grow only by 2.2% in the second half of this year and at the same rate in 1999. The size of the American furniture market stood at $ 54.8 billion in 1997. It is likely to grow by 6.9% this year to reach $ 58.6 billion. Growth in 1999 will be slower - at 4.9% - bringing the market size to $ 61. 5 billion next year. Quarterly data seasonally adjusted at annual rates Source: U.S. Department of Commerce, Strategic Projections Inc., AKTRIN. For more information contact by e-mail: aktrin@aktrin.com