Smith Leonard Accountants and Consultants has revealed the economic trends expected for this year. Looking back on 2024, according to the latest survey of residential furniture manufacturers and distributors, new orders were down 9% in November 2024
compared to November 2023, reverting to the negative trend seen in May – September 2024. Approximately 40% of participants reported increases versus decreases in November 2024 compared to a year ago. Consumer confidence continues this downward trend in 2025.
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Consumer confidence and economic trends
Consumer confidence continued its downward trend, with The Conference Board Consumer Confidence Index falling 5.4 points to 104.1 in January 2025. The Present Situation Index saw a notable drop, while expectations for future business and labour conditions weakened. Purchasing plans for homes and cars remained stable, but big-ticket item purchases declined slightly. Consumers continued to prioritise services such as dining out and streaming, while vacation plans declined.
Housing market trends remained strong, with existing-home sales rising 2.2% in December 2024, marking a 9.3% increase year-over-year. Single-family home sales rose by 10.1%, and condominium sales increased by 2.5%. The median single-family home price reached $409,300, a 6.1% increase from December 2023. New home sales grew by 6.7% compared to the previous year, with notable regional growth in the Midwest (40.3%) and Northeast (25.9%). Mortgage rates averaged 6.96% in January 2025, slightly lower than the previous month but higher than a year ago.
The U.S. economy expanded at an annual rate of 2.3% in the fourth quarter of 2024, a slowdown from the 3.1% growth in the previous quarter. Consumer spending, exports, and federal government spending contributed to this growth. Furniture and home furnishings sales increased by 2.3% in December 2024 from the previous month and rose 8.4% year-over-year. However, year-to-date sales remained 2.2% lower than in 2023.
Impact of tariffs on the furniture industry
The introduction of new tariffs on Mexico (25%), Canada (25%) with a 10% carve out for energy), and China (additional 10%) has raised concerns within the furniture sector. While a 10% tariff on Chinese goods appears manageable given prior inflationary pressures, the impact of tariffs on Canadian lumber and energy remains uncertain. Higher costs could influence consumer spending, interest rates, and housing activity, all of which are crucial drivers for the furniture industry.
Despite these challenges, recent positive developments—including growth in housing and retail sales, an averted port strike, and a favourable Vegas market—offer hope for a more stable second half of 2025. The industry has navigated similar disruptions in the past and remains resilient in adapting to changing market conditions. However, the uncertainty surrounding trade policies, potential retaliatory tariffs, and economic volatility continues to pose challenges for businesses moving forward.
While short-term disruptions are expected, industry experts remain cautiously optimistic about the latter half of 2025, provided that market conditions stabilise and businesses can effectively adjust to evolving regulations and economic shifts.
More information:
Smith Leonard Accountants and Consultants
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