by With the exception of autos, consumers also remain leery of spending on other big-ticket items such as TVs and computers
WASHINGTON — The latest Consumer Confidence Index released last week by the Conference Board offers the industry a glimpse not only of current consumer sentiment, but also where consumers are planning to spend the most.
In summary, all three major indexes were down, with consumer confidence falling 1.3 points in August to 97.4 from 98.7 in July and the Present Situation Index based on consumer views of current business and labor market conditions, down 1.6 points to 131.2. Meanwhile, the Expectations Index based on consumers’ short-term outlook for income, business and labor market conditions fell by 1.2 points to 74.8.
All this coincides with a host of issues, including the impact of consumer concerns regarding the impact of tariffs on pricing. The board wrote that “references to tariffs increased somewhat and continued to be associated with concerns about higher prices. Meanwhile, references to high prices and inflation, including food and groceries, rose again in August.”
The report noted that confidence “fell for consumers under 35 years old, was stable for consumers aged 35 to 55, and rose for consumers over 55.” It also weakened among Republicans and Democrats, showing there was no significant partisan influence guiding views about the economy.
Yet despite the declines, the study showed that consumers’ purchasing plans for new and used cars increased in August, while plans to purchase homes remained stable following a decline in July. The index also found that with the exception of washers and dryers, purchasing plans for other big-ticket items were down slightly from July with the biggest impact seen on TVs and tablets.
The report also noted that consumers plan to purchase more services, including nondiscretionary categories such as financial services and car and home maintenance.
Discretionary spending plans such as dining out and outdoor and indoor entertainment were down, while vacation plans declined a second straight month, “with intentions to travel abroad and within the U.S. both declining.”
There was no specific mention of furniture, but the overall anticipated cautious approach to spending on big-ticket items combined with the lack of growth in plans to purchase a home, signals plans to buy furniture also could stall in the weeks and months ahead. Again, the implementation of tariffs in early August could contribute to this malaise toward the category, at least in the short term.
“Rising inflation continues to shift consumer spending habits toward necessities such as groceries and away from discretionary services,” the Conference Board said in an Aug. 29 follow-up economic report. “In July, consumers were focused on chasing discounts ahead of another round of tariff increases.”
“Consumers’ renewed focus on goods over services suggests an effort to front-run tariffs before the new round took effect in August,” the group added. “This is supported by July’s outsized surge in goods imports, according to Census Bureau data.”
The Conference Board also shared the following insights in its Aug. 29 report:
+ Rising inflation will likely limit how much consumers can spend on goods and services when adjusted for inflation, leading to further deceleration in economic growth in the second half of the year. After modest GDP growth of 1.4% in H1, we estimate the economy will expand at only half that pace in H2.
+ The sharp rise in goods imports is expected to weigh on GDP growth in the third quarter, with the economy expected to expand by only .6% in the period.
Furniture remains in the cross hairs as the industry continues to grapple with both tariffs and interest levels that are slowing existing home sales.
While pricing continues to adjust given the impact of issues like tariffs on finished goods, it’s probably time for the industry to take steps to put consumers’ minds at ease. While prices may be rising, consumers also need to understand that the product they are considering has built-in value, features and benefits that will make furniture a long-time investment in the overall aesthetics, livability and value of their homes.
