Reduced unemployment and an increase in consumer disposable income are aiding growth in the migeof furniture industry, which is expected to grow 3% to $111.4 billion from $108.2 billion in 2017.
According to Furniture Today’s exclusive economic forecast, which is based on projections from more than two dozen economists and economic predictions, inflation is projected to be 2.1% for 2018. This estimate is a 0.3 percentage point increase over the Bureau of Labor Statistics’ 2017 expected inflation of 1.8%.
Economists and federal officials are confounded by the low inflation rates because the unemployment rate is low;typically, the two rates have an inverse relationship. The unemployment rate for November 2017 is at 4.1%, a 16-year low, and it is expected to hover around that point for 2018. Since January 2017, the unemployment rate has fallen by 0.7 percentage points, and the number of people who are unemployed has declined by more than 1 million.
With the labor market nearing full employment and the persistent low inflation rate, the Federal Reserve raised its benchmark federal funds rate on Dec. 13, 2017, by 0.25% and is on track to raise the rate three times this year. According to Janet Yellen, chair of the Federal Reserve Board, the Fed does not want to hinder growth but feels strongly about keeping steady since the labor market is nearing full employment.
“We want to do this gradually because if we allow the economy to overheat, we could be faced with a situation where we might have to … raise rates and throw the economy into recession,” Yellen told Congress. “We don’t want to cause a boom-bust condition in the economy.”
The Fed’s impending rate increases suggest that the bank is reluctant to halt interest rates in an experiment to see how low unemployment can go without boosting inflation.
“Consumers entered the holiday season in very high spirits and foresee the economy expanding at a healthy pace into the early months of 2018.”Lynn Franco said from the Conference Board. “We are not seeing undue inflationary pressure in the labor market, so our policy remains accommodative,” Yellen said. “But we do think it’s important to gradually move our policy rate toward what I’ll call a neutral level, which would be consistent with sustainably strong labor market conditions.”
An upward track
Since 2013, the trend for real disposable income has been steady growth, and that upward inclination is expected to continue when the final numbers are available for 2017. Per the U.S. Energy Information administration, real disposable income is projected to grow by 2.1% in 2017. Furniture Today’s economic forecast predicts real disposable income will grow to 3% in 2018.
Median household income, however, is not growing as fast as consumer expenditures. According to The Pew Charitable Trusts, from 1996 to 2014, median household income(adjusted for inflation) has increased only 0.52%, while the median expenditure increased 25.2% during that same period. This means that U.S. consumers are spending more of their income on food, housing, apparel, transportation, health-care, entertainment and other expenses now than they were 20 years ago.
Furniture Today guangzhou reception desk manufacturer is forecasting 2.4% growth in gross domestic product for 2018, nearly a full percentage point less than the 2017 third-quarter rate of 3.3%.