Despite being faced with confusing and contradictory rules and policies related to the Coronavirus, the U.S. economy, and the world in general, is gaining positive economic momentum. Some states remain under lockdowns, while other states are moving increasingly to relief from all restrictions and full economic activity.
Key elements supporting economic growth:
• Stimulus spending by the federal government ($3.5 trillion) has provided consumers and businesses some financial respite from the economic lockdown.
• The Federal Reserve has maintained low-interest rates and is providing significant liquidity.
• Existing home sales, working remotely, and stay-at-home lockdowns are helping to fuel vigorous residential remodeling spending.
• New home construction remains close to traditional levels.
• Employment is growing, as is consumer spending.
• Consumer confidence is rising, and this should aid in improving consumers’ post lockdown morale, as will a Coronavirus vaccine possibly available very soon.
• Energy costs remain positive.
• Government spending in the near-term will be a boost to growth.
The following issues will restrain economic growth in the U.S. and pose a threat to the recovery continuing:
• Coronavirus, if it spirals out of control creating a major pandemic, triggering supply chain disruptions, unemployment, renewed restrictions, and a worldwide recession.
• Imposition of heavy economic regulations and increased taxes could stymie economic growth.
• Corporate profits are weak due to China tariff costs and a weakened U.S. economy.
• Tariff negotiations could devolve into a major trade war.
• Consumer debt share of disposable personal income and federal debt are rising.
• The huge U.S. government deficit could have unintended consequences that threaten U.S. economic stability and interest rates.
Comparing the U.S. FLOOReport – 2021 Edition flooring forecast dollar value consumption percent change with the calculated 2020 results year-to-date at June 30 indicates that all U.S. flooring type sales are being cannibalized by LVT at a faster rate than originally forecast. Also, the economy collapsed in the second quarter of 2020 under the weight of unforeseen virus-related restrictions and lockdown.
Santo Torcivia is President of Market Insights LLC in Reading, Pennsylvania. He can be reached at 610.927.2299 or storcivia@marketinsightsllc.com.
This is a summary of the September 2020 Quarterly Market Monitor Report published by Market Insights LLC. NWFA members have exclusive access to the full report, which provides forecasts and analysis of economic, market, and industry conditions and trends affecting the North American flooring market. The report includes a historical and forecasted volume of dollar sales of total wood flooring (at mill sell price) per metro area and state. Separate reports are available for the United States and for Canada. The availability of the reports on a quarterly basis will provide NWFA members with current data that can help them develop business plans, prioritize inventory, and react to market conditions in a timely manner. NWFA members may download the full report by visiting nwfa.org.