In an updated forecast, industry analyst Jerry Epperson is now calling for a 2.9% increase in U.S. consumer spending on furniture and bedding this year – much of it due to price increases rather than real growth.
But he’s looking for gains of 4% next year and 5.7% in 2013, which he expects will be “the best year for furniture and mattresses in recent history…. Without the distraction of the presidential election and with stronger existing home sales (above 5 million units), we expect the closest to ‘normal’ activity the home furnishings industry has seen in almost six years.”
He expects consumer spending, the broadest measure of industry retail activity, to continue growing at 4.1% in 2014 and 5% in 2015. The spending figure is projected at $83.3 billion this year and is forecast to top $100 billion in 2015.
Late last year, Epperson, of Mann, Armistead & Epperson in Richmond, had expected better news in 2011 based on economic indicators and projections at the time. But GDP growth was slower than expected, unemployment stayed high as too few jobs were created, and the modest recovery in housing starts has mainly been in multi-family, with single-family starts still declining a bit.
He said he still expects economic growth to pick up in the second half of this year – aided by a drop in gas prices – but not as much as was expected earlier in the year.
“We do not expect a double-dip recession, but agree with many that it has a 25% to 30% chance of occurring, most likely in early 2012 – if at all,” he wrote in the new forecast.
Epperson, who bases his economic assumptions on the University of Michigan projections for 2011 and 2012 and uses a blend of five other long-term forecasts for 2013-2015, said he expects U.S. economic growth will reach or exceed 3% next year. That will finally “give the economy a perceivable level of growth,” he said.
He projects GDP growth of a more consistent 3.3% to 3.5% in 2013 as home resales and housing starts pick up. More gradual improvement is expected in 2014 and 2015 as unemployment finally declines to 8% or lower, according to the forecast.