Aktrin Forecasts $77.5 Billion In American Consumer Spending On Furniture And Bedding

Furniture World Magazine

The economy in the United States is performing fairly well. Real GDP growth stood at 4.2% in 2004, up from 2.7% the year before. However, growth slowed down while the year progressed and the slowing trend continued during the first half of this year. For 2005 as a whole, we predict a growth rate of 3.6% and even less (3.2%) next year. Personal income also advanced nicely from an average rate of 3.2% in 2003 to 5.9% in 2004. Due to an expected increase in job creation, personal income may grow even faster this year, that is approximately 6.0%. However, if we take inflation and taxes into account, the growth rate of real disposable income in 2005 will be only about 2.1%. Growth of American consumer spending stood at 2.9% in 2003. In view of the improved economic pace, it advanced to 3.8% last year. We believe that this pace can be maintained this year, but for 2006, we predict a slower rate of about 2.6%. The durable consumer good market is quite sensitive to consumers’ confidence and household expenditures on such goods are subject to erratic fluctuations. After stagnating in the second quarter of 2004 the growth rate rose to a staggering 10.8% in the third quarter only to descend again to a meager rate of 2.6% in the first quarter of 2005. The second quarter of this year saw once more a good performance at a rate of 8.3% (all rates are annualized). The average annual growth last year amounted to 6.0% and for this year we predict a rate of 4.8% Residential construction was a very strong sector of the American economy during the past two years. Thanks to low mortgage rates, the performance remained robust in the first half of 2004 but it decelerated in the second half of the year, averaging 10.3% for 2004 as a whole (in value terms). The housing market is now a bit oversupplied, and we expect growth to be below 7% this year and probably still lower in 2006. In volume terms, this translates to approximately 1.96 million new housing units each in 2004 and 2005 but only an expected 1.75 million in 2006. Furniture consumption in the USA was weak during the first three years of this century. Fortunately, the sector entered a strong recovery phase in 2004, recording a 7.9% growth rate. We don’t foresee a repeat of such a stellar performance in 2005. Our prediction is a 2.7% growth rate, bringing the market value to $ 77.5 billion. Next year, the market value may surpass for the first time the US$ 80 billion mark. Source: AKTRIN Furniture Information Center Tel.: (905) 845 3474 E-mail: aktrin@aktrin.com; Web: http://furniture-info.com