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

Furniture World Magazine

Following a disappointing second quarter of 1998, American personal consumption regained its strength in the fourth quarter of the year. Consumer confidence was buoyed by recent gains in wages, salaries and other incomes, as well as good employment prospects and a resurgent stock market. Spending on big-ticket durable goods was particularly good.. For 1998 as a whole, we estimate that total retail sales will climb 6 to 7% above year-ago levels. Fuelled by low interest rates, Americans are spending more than they are earning. They are borrowing and dipping into their savings. During the last quarter of 1998, the US personal savings rate – savings as a percentage of after-tax income – was negative, the worst showing since 1959. A strong housing market was an additional stimulus for expenditures on furniture and furnishings in 1998. U.S. sales of new homes climbed to higher levels last year, as low mortgage rates and stock market gains rejuvenated the housing activity. However, the positive picture is confined to the western United States. Housing sales elsewhere in the USA were relatively modest. Consumer spending has become very vulnerable. Excessive credit purchases are unsustainable and this year is likely to bring a consumption slowdown. The furniture market (at retail prices) stood at $54.8 billion in 1997. It grew by 5.8% last year to reach $ 58.0 billion. Growth in 1999 will be slower at about 3.7% which would bring the market size slightly above the $ 60 billion mark.