Improving economic outlook

The home furnishings business, like much of the U.S., is undergoing a period of change as a new Millennial generation of consumers and employees begin to move into the workforce and into their primary household formation years. At the same time, the graying Baby Boom generation is poised to remain active both in lifestyle and purchasing influence longer than any previous generation in history, a shift with profound implications for the furniture industry.

In the nearer term, the industry continues on a steady recovery pace from the Great Recession with the fundamentals supporting household formation and consumer purchasing showing gradual improvement. Unemployment levels remained low throughout 2015, with the percentage decreasing steadily each month, falling to a low of 5% for October and November.

The housing market has also remained a positive indicator with new home sales through October increasing 4.9% over the previous year and existing home sales growing 3.9% year-over-year.

Projecting these trends forward five years, Furniture/Today estimates overall furniture and bedding sales will grow 19.6% over the next five years to a total of $122 billion in 2020. For those of you keeping score at home, that’s an acceleration over last year’s projection, which estimated the segment to grow at a 15.5% rate over the 2014-2019 period.

Source: Bill McLoughlin, http://www.furnituretoday.com

General Market Situation – Overall Economic Climate in the USA

The US job market is booming

In December, the US economy created far more jobs than expected. According to the Department of Labor, employment rose by 292,000 in the final month of the year. The unemployment rate remained at 5.0 percent. The country’s central bank, the Fed, is thus nearing its goal of full employment. (Ksta 09./10.01.2016)

Rising interest rates in the USA

In mid-December, the Fed raised interest rates for the first time since 2006, announcing a slight increase of 0.25 percentage points. Although the Federal Funds rate is still extremely low – it ranges between 0.25 and 0.5 percent – this nevertheless marks the beginning of a new era of rising interest rates.

“That makes companies here in Germany more competitive,” says Gustav Horn, director of the Macroeconomic Policy Institute (IMK) in Düsseldorf. The reason: the dollar prices of their products will drop. Things like German cars, solar cells or machinery will become cheaper in the USA. And because that could result in growing demand for European products, it will indirectly improve the position of employees in German firms as well. (Berliner Morgenpost, 18.12.2015)

Boost for exports to the USA

Some analysts anticipate that the euro will reach parity with the dollar by the end of 2016. Above all, a weaker euro could benefit export-oriented companies by making their goods cheaper for foreign buyers. (Wirtschaftswoche)