Executive Summary

Our latest survey showed that new orders in July 2023 were up 28% over July 2022, but once again we have to look deeper to understand what that means. July 2022 new orders were down 37% from July 2021 when they were down 11% from July 2020. But July 2020 orders were way up. Follow that? As we have said, comparisons today are difficult. Just read the quarterly reports from the public companies and then compare their results back for the same periods to the last few years.

Year to date, new orders were down 4% from last year when they were down 29% from 2021. For July 2023, new orders year to date were down for 63% of the participants.

Shipments were down 21% in July versus July 2022. See the Highlights section below for the comparisons to previous years. Backlogs continued to return closer to more normal levels, though a few remained higher. Inventories increased a bit from June levels but were 28% below last July. The number of factory and warehouse employees as well as payrolls continued to drop as would be expected.

National

Consumer Confidence

The Conference Board Consumer Confidence Index® declined again in September to 103.0, down from an upwardly revised 108.7 in August. The Present Situation Index rose slightly to 147.1 from 146.7. The Expectations Index declined to 73.7 in September, after falling to 83.3 in August. Expectations fell back below 80—the level that historically signals a recession within the next year. Consumer fears of an impending recession also ticked back up, consistent with what they anticipate for the first half of 2024.

Dana Peterson, Chief Economist at The Conference Board said, “Write-in responses showed that consumers continued to be preoccupied with rising prices in general and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates.”

The Conference Board Leading Economic Index® (LEI) for the U.S. declined by 0.4% in July 2023, following a decline of 0.7% in June. The LEI is down 4.0% over the six-month period between January and July 2023. The report indicated that the outlook “remains highly uncertain. The leading index continues to suggest that economic activity is likely to decelerate and descend into mild contraction in the months ahead. The Conference Board now forecasts a short and shallow recession in the Q4 2023 to Q1 2024 timespan.”

Housing

Existing-home sales slipped again in August with the four regions reporting sales improved in the Midwest, unchanged in the Northeast, and slipped in the South and West. All four regions recorded year-over-year sales declines.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums, and co-ops – slid 0.7% from July. Year-over-year, sales fell 15.3%.

Single-family home sales fell 1.4% from 3.65 million in July and 15.3% from the previous year. The median existing single-family home price was $413,500 in August, up 3.7% from August 2022. All four U.S. regions posted price increases.

Sales of new single‐family houses in August 2023 were at a seasonally adjusted annual rate of 675,000, which was 8.7% below the revised July rate of 739,000, but was 5.8% above the August 2022 estimate of 638,000.

Privately‐owned housing starts in August were at a seasonally adjusted annual rate of 1,283,000 and was 11.3% below the revised July estimate and was 14.8% below the August 2022 rate. Single‐family housing starts in August were 4.3% below the revised July figure.

Comparing August 2023 to August 2022, single-family starts were up 2.4%. Regionally starts were down 10.0% in the Northeast, 15.1% in the Midwest, 12.8% in the West but were up 14.6% in the South.

Other

Advance estimates of U.S. retail and food services sales for August 2023 were up 0.6% from the previous month, and up 2.5% above August 2022. Total sales for the June 2023 through August 2023 period were up 2.2% from the same period a year ago.

Retail trade sales were up 0.6% from July 2023, and up 1.6% above last year. Gasoline stations were down 10.3% from last year, while food services and drinking places were up 8.5% from August 2022.

Sales on an adjusted basis at furniture and home furnishings stores were down 7.2% from August 2022. On an unadjusted basis, sales at these stores were down 4.3% year to date.

The Consumer Price Index (CPI-U) rose 0.6% in August after increasing 0.2% in July. Over the last 12 months, the all-items index increased 3.7% before seasonal adjustment. The all items less food and energy index rose 4.3% over the last 12 months. The energy index decreased 3.6% for the 12 months ending August, and the food index increased 4.3% over the last year.

Thoughts

If we forget the difficulty in comparisons, it appears that business overall has slowed for most all producers and distributors. While the lower end has been slower due to the continued pressure of overall cost of living increases, the higher end seems to also be affected lately. With the overall economy slowing down, the political rhetoric from the Presidential race as well as others, and overall consumer confidence falling, there is little wonder that business overall would be hurting.

The signs of a recession continue to seem like we are heading into one in spite of thinking a couple of months ago that we might dodge one. In fact, one might think that we are probably there now. There is so much negativity in the news, much of it deserved lately, that it is hard to make yourself feel like spending much money until some of this is sorted out, no matter what income level you have. The stock markets seem to lead us to that belief as well.

Some comments we have heard from a few in the retail sector is that the fourth quarter may be a little better and 2024 may be more normal, but we are wondering if that might be a bit optimistic. We do think that later on in 2024, we may return to more normal levels of the economy, but remember, it has always appeared that furniture business has felt the pinch early and is sometimes the last to come out of slow periods, if for no other reason than it being a more deferrable purchase than most durable goods.

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