Furniture Industry Expected To Recover Rapidly In 2002 New AFMA Forecast Predicts 7.2% Rise Next Year Following 12.8% Drop in 2001

Furniture World Magazine

Wholesale furniture shipments are expected to drop 12.8% this year, followed by a quick rebound early next year that will curtail the current recession and post a 7.2% gain in shipments for 2002, according to the newly revised forecast released by the American Furniture Manufacturers Association today. Furniture shipments are projected to total $22.290 billion this year, a decrease of 12.8% from last year’s $25.570 billion, the new forecast shows. In 2002, shipments are expected to rise 7.2% to $23.904 billion. By product sector, AFMA expects wood furniture shipments to decline 14.2% this year to $10.471 billion, then rise 7.3% to $11.237 billion in 2002. Shipments of upholstered furniture are expected to total $9.627 billion in 2001, down 11.3% from 2000. In 2002, an increase to $10.262 billion is expected, growth of 6.6% over the previous year. "The furniture industry has been struggling for nearly a year," noted Joseph P. Logan, AFMA’s vice president of financial services. "And there is nothing that could have prepared us for the tragic events of Sept. 11. The terrorist acts moved the national economy into a recession, and the furniture industry has suffered further blows as well. The good news is that the recession will be short and mild, and the recovery will begin in earnest early next year. Our economy, and the character of our people, are resilient and will benefit from expansionary monetary and fiscal policies already in place." The AFMA forecast for the furniture industry 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. Pent-up demand for furniture is expected to be a major contributor to the rapid rebound in furniture sales next year. "The housing market was extremely strong until Sept. 11, yet furniture sales did not keep pace," noted Logan. "That means there are many new houses that have not yet been furnished." Prior to Sept. 11, the AFMA forecast had predicted an increase in furniture sales in the fourth quarter of this year as the general economy improved. "Unfortunately, now we expect it will be next year before the U.S. economy and consumer confidence improve enough to have a significant impact on furniture sales," Logan said. "But with even more consumers postponing furniture purchases, the pent-up demand will be even more significant." Changing consumer behavior also is expected to contribute to the rebound in furniture sales. "Consumers are traveling less and spending more time at home following the events of Sept. 11," said Jackie Hirschhaut, an AFMA vice president. "Because consumers are becoming more focused on their homes than they’ve ever been, many of them will want to purchase new home furnishings to make their homes even more inviting, comfortable and functional for spending time with family and friends. It’s a trend we are calling ‘comfort-zoning.’" This year, consumer furniture demand is expected to drop 4.2% to $61.396 billion but rise next year by 3% to $63.230 billion. The largest quarterly drop is expected to be in the fourth quarter of 2001, which will see demand fall 9.5% below the last quarter of 2000. By the second half of next year, however, consumer furniture demand is expected to be significantly higher, showing gains of 7% in the third quarter and 14.9% in the fourth. "The furniture industry will be relieved to see 2001 come to a close," said Logan. "It’s unquestionably been the toughest year we have experienced in more than 30 years. The good news is that it’s nearly behind us now, and we can all look forward to a much better year in 2002." The American Furniture Manufacturers Association is headquartered in High Point, N.C. – the furniture capital of the world – and represents more than 350 leading U.S. furniture manufacturers. These manufacturers represent a total of 400,000 employees and more than 75% of U.S. furniture shipments.