Is the industry prepared for another recession?

The imposition and threat of further tariffs have consumers worried, and that’s not a good thing for furniture sales

HIGH POINT — So here we are still in Q1 of 2025, a year in which many in the industry were hopeful for a rebound.

Turns out, those hopes are being dashed, at least initially, no thanks to the disruption caused by a variety of factors.

Of course, the year is still young, but the hopes for a strong start out of the gate have been tempered mostly by tariffs, in addition to mass layoffs in the federal government sector.

Already the price increases have started or are starting to take effect, particularly on goods coming from China, which now has a 45% tariff including the 20% increase implemented last month.

The increases have been documented by letters sent to retailers stating the obvious: With already tight margins, companies are not able to absorb the double-digit increases and thus must pass them along to their customers.

In turn, retailers are not expected to eat much of the increase themselves, meaning that the increased costs will be borne by consumers. It’s a fact that the current administration may have ignored, but one that consumers won’t, as many are already cash strapped with current expenses.

Just a few weeks ago, for example, the Conference Board reported that the Consumer Confidence Index fell by 7 points in February, which was the largest monthly decline since August 2021. According to Stephanie Guichard, senior economist of global indicators at The Conference Board, it’s also the third consecutive month-on-month decline.

Meanwhile, consumers’ short-term outlook for income, business and labor market conditions fell 9.3 points to 72.9. It was the first time since last June that the Expectations Index was below a threshold of 80, signaling a recession ahead, which the current president nonchalantly mentions as if it were simply a weather forecast predicting cloudy skies for the next few days.

But few consumers want a recession any time soon, a factor that anyone in elected office should acknowledge. And they certainly don’t want any more inflation, a factor some voiced with their vote this past November.

Yet, according to the index, consumers’ average 12-month inflation expectations rose from 5.2% to 6% in February. In addition to concerns about inflation, the increase also reflects consumers’ fears about the impact of tariffs.

“There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019,” Guichard said. “Most notably, comments on the current administration and its policies dominated the responses.”

Compare this to the results issued just after the November election, when Consumer Confidence rose 2.1 points from October. Not a huge increase by any stretch, but one worth noting as was the 4.8 point increase in the Present Situation Index based on consumers’ view of current business and labor market conditions. The Expectations Index, meanwhile rose .4 points, a slight gain to 92.3, which the board said was well ahead of a threshold of 80 that usually predicts a recession.

It’s a stark difference that may surprise some given their hopes for a continued economic rebound with a new president in place.
And let’s be clear. Many may be giving the current administration a pass for its efforts to stem illegal immigration and illegal drugs across the border.

But this doesn’t negate the fact that most serious and competent business people, including our many friends and supporters in the furniture industry, dislike uncertainty and the type of instability that issues like inflation and even the mention of tariffs have left in their wake. In this respect, we are not unlike most other industries that produce and depend on the sale of durable goods.

Up to this point, we’ve collectively benefited from several straight months of retail sales increases that have begun to reverse the nearly year and a half of month-over-month increases. We hope that continues, but the threat of rising prices on imports could stop consumers dead in their tracks and reverse the gains yet again.

And here’s a message for an administration that thinks tariffs will also bring furniture jobs back to North Carolina. They won’t. Or at least not on the type of scale the current president implies.

But even if some jobs do come back, imports will remain something the consumer demands for price and value that will continue to challenge domestic producers to do the same. As we love made-in-America products, we hope they continue to rise to the challenge as they have in the past.

But here’s another thought. No one in the industry wants a recession, or any type of slowdown, particularly like the one we’ve been through in the past year or more. In case no one’s noticed outside, we’re generally the first ones in and the last ones to come out. We’ve been there too many times before.