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AKTRIN Reports Favorable Up-Trend in US Furniture Consumption

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Furniture consumption in the United Sates is in high gear and the underlying economic fundamentals suggest a continuation of this favorable trend. The American Gross Domestic Product (GDP) grew by 3.8% last year and only a moderate slowdown is expected for 1998. Driven by a fast rate of job creation, unemployment fell to 4.9% last year and may decline further. The tight labor market led to wage gains in excess of inflation. Personal disposable income stood 4.9% higher in 1997 than in 1996 and it may rise by another 5% this year. The housing market is also up-beat. Driven by low mortgages, 1,470,000 dwellings have been started in 1997 and no slowdown is in sight. Consumers reacted positively to the strong economy. The savings rate fell to 3.8% and spending grew by 5.7% in 1997. Consumers are financing large portions of their goods by loans, particularly large-ticket items, including furniture. Such goods are commonly financed by credit. The economy will continue to move upwards, albeit at a slower rate. The export sector is feeling the Asian currency crisis, and domestic demand shows some signs of weakness. It is also possible that the Fed may rise interest rates later this year. We predict GDP to advance by 3% this year and 2% in 1999. Housing starts may fall to 1.43 million this year and to 1.38 million next year. All this may have a diminishing impact on consumer confidence. Following a 3.3% growth in consumer spending in 1997, we predict it to be around 2.9% this year and 2.1% in 1999. Last year Americans purchased furniture and bedding for $ 53.3 billion which was 7.6% above 1996. Growth in 1998 and 1999 will be around 5%, which would bring the market to $ 56 billion and $ 59 billion in 1998 and 1999 respectively. For more information on AKTRIN visit their web area in the furniture consultants index or e-mail them at atktrin@aktrin.com

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