The economy will grow at a steady pace throughout 2005, with fewer spikes and troughs, and this will allow for continuing employment gains, according to an extended industry forecast prepared by industry analyst, Jerry Epperson, managing director at the Richmond, Va.-based Mann, Armistead and Epperson Ltd.

Epperson offered his forecast to industry executives gathered at the International Casual Furniture and Accessories Market in Chicago in September, noting that he has been under “heavy pressure” to develop an economic forecast for the furniture industry. “It has taken a lot of work over the last several months to develop this, but we finally have our forecast and long-range scenario,” he reported.

The five-year forecast is based on the University of Michigan’s Research Seminar on Quantitative Economics, combined with a three-year scenario developed by Mann, Armistead and Epperson. “This was done by putting together a number of longer term

Epperson

forecasts and by combining that with what has happened in the past six economic recoveries in the residential furniture industry,” Epperson explained.

For his 2004 forecast, Epperson made the assumption that growth from China might slow in the second half of the year because of possible anti-dumping duties. The rate of bedroom consumption will hold steady in terms of dollars, he suggested, but might represent fewer units.

Epperson also forecast that retailers would sell more than manufacturers would ship in 2004, as stores liquidate high inventories accumulated during the first part of the year.

In 2005, Epperson foresees possible deflation in upholstery prices as quotas on Chinese-manufactured fabrics and textiles are removed, and there is an increase in Chinese upholstery production. He believes furniture and bedding factory shipments will exceed retail sales in 2005 as retailers modestly restore warehouse inventories to meet consumer demand for same-day delivery and as new, non-furniture store competitors enter the furniture category (like Victoria’s Secret and Williams Sonoma).

Epperson’s forecast to the year 2008 will be presented at AFMA’s Economic Outlook Conference December 2 in Charlotte. See the calendar page for more details.

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