Here we are, only a few short weeks from the April furniture market and most of the buzz is still about ongoing supply chain issues, how well-trafficked the market might be, if the market will be ‘mask-on’ or ‘mask-off’, how clogged our ports still are, the ongoing high costs of transportation and the like.
Maybe I’m missing something, but for me, none of these challenges keep me up at night as much as the conundrum of trying to gauge consumer sentiment about today’s economy, how this is impacting the quality of their day-to-day lives, and most of all, how this is likely to impact their spending on an already highly-deferrable, discretionary purchase called furniture.
Not that long ago, and thankful to have not fallen prey to the virus or its variants, consumers were almost grateful to try and adapt to what some call the new normal, (something I prefer to describe as ‘new-next’).
Keep in mind, that meant putting the pieces of their Covid-rearranged lives together, trying to find a new rhythm, and battling inflation that is currently at its highest level in four decades.
And as the late-night infomercial host would say right about now….’But wait…there’s more!’
The latest assault on their wallets is waiting for them each day at the gas pumps.
While analysts may differ regarding the correlation between Russia’s invasion of Ukraine and the spike in gas pricing, consumers agree on one thing—with gas prices now at a minimum here in North Carolina of $4.19 a gallon and as high as $6.99 in Los Angeles—consumers are hurting financially and psychologically.
Desmond Lachman, an economics expert with the American Enterprise Institute reported, “Since the start of the year, international oil prices have increased some 60% to their present level of around $125 a barrel.”
He went on to project that, “If sustained, the increase in international oil price could add 1.5 percentage points to consumer price inflation, which is already uncomfortably high at 7.5%.”
Looked at another way, this is likely to cost the typical American household an extra $2,000 a year for gas, according to analyst firm Yardeni Research. Factor in that family is probably paying an additional $1,000 a month for food and another $700-$1,000 extra for utilities and even yours truly, who flunked algebra, knows that adds up to some $4,000 they may not throw our way.
Maybe my theory about pain at the pump and a slowdown in consumer spending is flawed, but polls conducted by minds far sharper than mine seem to support my theory that Americans are troubled.
And historically, when mildly hysterical, Americans keep the wallets and purses closed when it comes to non-essential purchases.
According to a recent Gallup poll, when thinking about the state of the nation, 78% of the respondents said they are dissatisfied.
The survey further reflected Americans’ recent concern about the economy when the percentage of respondents describing national economic conditions as “poor” increased five percentage points to 42% in February, and the percentage saying conditions are getting worse ticked up three points to 70%.
Both figures are tied for the highest they have been since the first months of the pandemic.
Recent data confirms that consumers are beginning to cut back on some of the items that have gone up the most in price.
On the bright side, statistics from the Bureau of Labor Statistics indicate that while furniture prices have gone up about 9% from a year ago, that increase was much less than for other categories including car and truck rentals (87.7%), used cars (45.2%) and, of course, gasoline (45.1%).
Even so, my call for furniture sales is like the road sign that warns us to slow down due to sharp curves ahead.
“Over the next 12 months people are expecting to spend more on groceries, utilities, and at-home basics while many signal they will spend less on discretionary items and out-of-home occasions,” observes Nicole Corbett, director, Global Thought Leadership, NielsenIQ.