Epperson, of investment bankers Mann, Armistead and Epperson in Richmond, Va., said he expected consumer expenditures on residential furniture and bedding would reach $67.550 billion in 2003, a 1.3 percent increase over 2002 sales of $66.696 billion. For 2004, he forecast a 5.4 percent increase to $71.165 billion.

“This is a much healthier industry than most people know,” he commented. “That’s the message we’re trying to get to investors.”

Epperson pointed to the “extraordinarily low” mortgage rates that created an urgency for all age groups to buy homes if they possibly could, including some older consumers buying second homes or helping their children buy homes. “The home buying and mortgage refinancings have created a large demand for furnishings that may be a stimulus for the furniture industry in 2004,” he reported.

Recent reports from the University of Michigan’s Research Seminar in Quantitative Economics project 2.1 million new payroll jobs in 2004 and another 2.3 million in 2005. “Think what that’s going to do for consumer confidence,” Epperson said.

Despite some clear indicators, creating a forecast for the residential furniture industry has become more difficult in recent years. Epperson noted that AFMA’s economic forecast, which was discontinued last year, was based on consumption. “If you could predict what consumers would buy, then you could forecast what U.S. manufacturers would make,” he explained.

However, this old model didn’t take imports into account. Domestic shipments have been on the

Epperson

decline for the last three years, while imports have exploded. Using import data from the U.S. International Trade Administration, Epperson created a new methodology that attempts to quantify imports’ share of the domestic market – which he pegged at about 50 percent of the wood household furniture sold in the United States in 2003 and about 15 percent or more of the upholstered furniture sold.

Economic Outlook Conference attendees received a global economic perspective from Tom Easton, bureau chief for The Economist, a leading international publication linking business and politics.

“Everywhere around the world – for the exception of Belgium and Japan – the economic projections are going up. This is just unequivocally good news,” said Easton.

Clare W. Zempel, a consultant who previously served as the chief investment strategist and chief economist at Robert W. Baird & Co., Milwaukee, closed the program with a forecast equally as optimistic.

“There is no reason to think the economy will slow down sharply in 2005,” Zempel offered. However, he said he expects housing to plateau and suggested consumer spending “will be good, just not all that great.”

AFMA’s Economic Outlook Conference is an annual event held each December. A highlight of the event is presentation of the Forecaster of the Year Award, a crystal ball honoring the attendee who created the most accurate forecast at the previous year’s conference. The 2003 award went to Ronnie Holman, president of AFMA supplier member RPM Wood Finishes Group.

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