AMFA reveals 2003 furniture outlook

AMFA reveals 2003 furniture outlook – news

HIGH POINT, N.C. — Wholesale sales of residential furniture are expected to increase 3.8 percent this year and continue growing slowly throughout next year, according to a new forecast from the American Furniture Manufacturers Association. This increase may indicate an increase in redecorating and new home buying and may translate into increased art purchases. Various furniture trends may also impact art sales, as well.

The forecast shows more modest growth for this year than the association had predicted in its most recent report in October 2002. Joseph P. Logan, AFMA’s vice president of financial services, said. “There are a number of uncertainties in the year ahead that dramatically affect our outlook for furniture sales. Once those uncertainties are behind us, we expect sales will strengthen beginning in the latter part of 2003 and into 2004.”

Furniture shipments are expected to total $23.8 billion in 2002, according to the new AFMA forecast. In 2003, sales are expected to rise 2.4 percent for a total of $24.4 billion percent in 2004.

Although lower interest rates have helped boost housing sales to record levels, furniture sales have not kept pace, as they typically do.

“I’m baffled and bewildered as to why furniture sales have not been stronger,” said Walter McDowell, executive vice president of Wachovia Corporation in Winston-Salem, N.C., who was among speakers at AFMA’s recent Economic Outlook Conference in Charlotte. “There absolutely has to be pent-up demand for furniture.”

In addition to the robust housing market, McDowell noted the following factors that should indicate strength for furniture sales: record numbers of Americans are employed, personal incomes are rising, the 77-million baby boomers are in their peak earning years, home ownership has increased from 63 percent in 1965 to 68 percent today, square footage of housing has increased, second home sales have increased 40 percent since 1995, and interest rates are the lowest they have been in many years.

“All these factors make me bullish for furniture sales,” McDowell said. “I think the future looks brighter than the recent past.”

Others agreed. “I think things are looking up,” said James F. Smith, senior fellow and director of the Center for Business Forecasting at the Kenan Institute of Private Enterprise at the University of North Carolina in Chapel Hill. In his talk at AFMA’s conference, Smith noted that a U.S. Commerce Department report released that day showed retail home furnishings sales in November were the strongest they had been in two and a half years. “The outlook is pretty darn good,” he said. “The truth is, the U.S. economy is performing about as well as anyone could expect. The recession last year was the mildest ever recorded since 1854. We should not be expecting a major expansion since the decline was not that great.”

Saul Hymans, professor of economics at the University of Michigan, director of its Research Seminar in Quantitative Economics and an economic consultant to AFMA, also is optimistic. “Once we get through this soft spot, the outlook is pretty good,” he said.

AFMA’s forecast is based on the current outlook for the U.S. economy that is prepared by the Research Seminar in Quantitative Economics at the University of Michigan.

Hymans noted [at press time] that the current forecast is based on the assumption that the United States will not actually go to war with Iraq. If the situation with Iraq is not resolved without war, the economic outlook may change, he said.

The American Furniture Manufacturers Association represents more than 200 leading U.S. furniture manufacturers and 250 suppliers to the industry.

For more information about the AFMA and other trend reports, visit, www.afma4u.org.

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