AFMA Predicts 2.7% Decline in Industry Shipments for 2001, Increase of 3.7% for 2002

Apr 19, 2001, 01:00 ET from American Furniture Manufacturers Association

    HIGH POINT, N.C., April 19 /PRNewswire/ -- Furniture shipments are
 projected to decrease 2.7% in dollar value this year, but achieve a stronger
 performance next year, with shipments increasing 3.7% to $25.814 billion,
 according to the just-revised Economic Forecast of the American Furniture
 Manufacturers Association.
     This year, manufacturer shipments are expected to total $24.890 billion,
 the new forecast shows.
     "The decade-long growth of the U.S. economy had to falter eventually,"
 said Joseph P. Logan, AFMA's vice president of financial services. "The
 'wealth' effect that had bolstered consumption of consumer durables and
 housing has been reversed. The brakes have been put on the economy, but only
 temporarily."
     In fact, Logan noted on opening day of the spring International Home
 Furnishings Market here that the outlook for the furniture industry has
 already started to improve following the Federal Reserve's surprise interest
 rate drop on Wednesday. "Furniture sales will undoubtedly be positively
 affected by this most recent move," Logan said. "The drop in interest rates
 will boost the housing market, which in turn will result in stronger furniture
 sales. And the boom in the stock market will help improve consumer confidence.
 This news could not have been better timed for the furniture industry, coming
 on the eve of the market's official opening."
     After conditions gradually improve this year, quarterly growth in
 furniture shipments next year is expected to range from 1.9% to 5.3%,
 resulting in a 3.7% overall gain for the year.
     The AFMA forecast's econometric model of the furniture industry is based
 on the current economic outlook for the U.S. economy, which is prepared by the
 Research Seminar in Quantitative Economics at the University of Michigan.
     Saul Hymans, professor of economics at the University of Michigan and an
 economic consultant to AFMA, noted that the slowdown in the overall U.S.
 economy followed the coming together of several contractionary factors, in
 particular: sharply rising energy prices, a declining stock market which hurt
 consumer confidence, and a year of progressively tighter monetary policy as
 the Federal Reserve increased short-term interest rates by 175 basis points
 from June 1999 to May 2000.
     Looking ahead, however, Hymans says that lower interest rates and
 President Bush's proposed tax cuts should have a positive effect on consumer
 confidence and spending. In addition, energy prices are expected to drop
 during the forecast period. Unemployment, however, is expected to continue
 rising, from the 4% average during 2000 to 4.7% for 2001 and 5.1% for 2002.
 Consumer price inflation should be just below 2% for this year and only
 average 2.3% for 2002.
     As the overall economy shows signs of improvement, consumers are expected
 to become more interested in big-ticket purchases such as furniture. Next
 year, according to the AFMA forecast, consumer furniture demand is projected
 to rise to $66.988 billion, an increase of 5.2% over this year. For 2001,
 consumer furniture demand is expected to be at the $63.696 billion level, a
 drop of 1.8% over last year.
     AFMA expects shipments of wood furniture to decline 3.7% in 2001, reaching
 $11.756 billion, then increase 3.6% to $12.182 billion in 2002.
     Upholstered furniture shipments are projected to total $10.646 billion in
 2001, down 2% from 2000. In 2002, an increase to $11.106 is expected, growth
 of 4.3% over the previous year.
     "Although 2001 is shaping up as a challenging year for the furniture
 industry, we fully expect to regain any losses next year and be back on a
 healthy growth track," said Logan. "After several years of substantial growth,
 it is not surprising that we are experiencing this adjustment."
 
     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 150,000 employees and more than 75% of U.S. furniture shipments.
 
 

SOURCE American Furniture Manufacturers Association
    HIGH POINT, N.C., April 19 /PRNewswire/ -- Furniture shipments are
 projected to decrease 2.7% in dollar value this year, but achieve a stronger
 performance next year, with shipments increasing 3.7% to $25.814 billion,
 according to the just-revised Economic Forecast of the American Furniture
 Manufacturers Association.
     This year, manufacturer shipments are expected to total $24.890 billion,
 the new forecast shows.
     "The decade-long growth of the U.S. economy had to falter eventually,"
 said Joseph P. Logan, AFMA's vice president of financial services. "The
 'wealth' effect that had bolstered consumption of consumer durables and
 housing has been reversed. The brakes have been put on the economy, but only
 temporarily."
     In fact, Logan noted on opening day of the spring International Home
 Furnishings Market here that the outlook for the furniture industry has
 already started to improve following the Federal Reserve's surprise interest
 rate drop on Wednesday. "Furniture sales will undoubtedly be positively
 affected by this most recent move," Logan said. "The drop in interest rates
 will boost the housing market, which in turn will result in stronger furniture
 sales. And the boom in the stock market will help improve consumer confidence.
 This news could not have been better timed for the furniture industry, coming
 on the eve of the market's official opening."
     After conditions gradually improve this year, quarterly growth in
 furniture shipments next year is expected to range from 1.9% to 5.3%,
 resulting in a 3.7% overall gain for the year.
     The AFMA forecast's econometric model of the furniture industry is based
 on the current economic outlook for the U.S. economy, which is prepared by the
 Research Seminar in Quantitative Economics at the University of Michigan.
     Saul Hymans, professor of economics at the University of Michigan and an
 economic consultant to AFMA, noted that the slowdown in the overall U.S.
 economy followed the coming together of several contractionary factors, in
 particular: sharply rising energy prices, a declining stock market which hurt
 consumer confidence, and a year of progressively tighter monetary policy as
 the Federal Reserve increased short-term interest rates by 175 basis points
 from June 1999 to May 2000.
     Looking ahead, however, Hymans says that lower interest rates and
 President Bush's proposed tax cuts should have a positive effect on consumer
 confidence and spending. In addition, energy prices are expected to drop
 during the forecast period. Unemployment, however, is expected to continue
 rising, from the 4% average during 2000 to 4.7% for 2001 and 5.1% for 2002.
 Consumer price inflation should be just below 2% for this year and only
 average 2.3% for 2002.
     As the overall economy shows signs of improvement, consumers are expected
 to become more interested in big-ticket purchases such as furniture. Next
 year, according to the AFMA forecast, consumer furniture demand is projected
 to rise to $66.988 billion, an increase of 5.2% over this year. For 2001,
 consumer furniture demand is expected to be at the $63.696 billion level, a
 drop of 1.8% over last year.
     AFMA expects shipments of wood furniture to decline 3.7% in 2001, reaching
 $11.756 billion, then increase 3.6% to $12.182 billion in 2002.
     Upholstered furniture shipments are projected to total $10.646 billion in
 2001, down 2% from 2000. In 2002, an increase to $11.106 is expected, growth
 of 4.3% over the previous year.
     "Although 2001 is shaping up as a challenging year for the furniture
 industry, we fully expect to regain any losses next year and be back on a
 healthy growth track," said Logan. "After several years of substantial growth,
 it is not surprising that we are experiencing this adjustment."
 
     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 150,000 employees and more than 75% of U.S. furniture shipments.
 
 SOURCE  American Furniture Manufacturers Association