Consumer confidence boost good for home

Don Hogsett, April 1, 2002

Supplying another strong dose of good news for the home fashions industry, consumer confidence jumped up substantially in March, The Conference Board reported, climbing to its highest level since last September, just before terrorist attacks rocked the U.S. economy.

But even more important may be a set of numbers buried deep inside the monthly report that suggest a big shift in consumer buying patterns — American shoppers may be ready to stop buying homes and start furnishing them.

Each month The Conference Board, a national business think tank, tracks consumers' buying plans over the next six months for homes, cars, major appliances and carpeting. And while overall confidence numbers rocketed up in the March canvass of 5,000 consumers, buying plans for big-ticket like homes and cars fell off. And plans to purchase major appliances held relatively steady.

Crucially, for home furnishings suppliers, buying plans for carpets — the only home fashions item in The Conference Board's market basket — rocketed up by 46.7 percent in March, to a reading of 6.6 from just 4.5 in February. Plans to buy a new carpet now stand at their highest level in 13 months, up 15.8 percent from a year ago.

That roughly tracks what the Redbook Retail Sales Average has been reporting in each of the past several weeks (see related story) — that sales of home-related goods are star performers.

And the U.S. Commerce Department, in its monthly tally of retail sales in a wide cross-section of channels of distribution, has identified home furnishings as a consistently strong performer. Indeed, during February, furniture and home furnishings retailers were the single strongest channel, followed by another home goods category, electronics and appliances.

In its monthly tally of consumer sentiment, a widely watched harbinger, overall confidence shot up dramatically, rising to a level of 110.2 from 95.0 in February. Consumers were feeling better about both current business conditions end economic conditions down the road. They're also more upbeat about the jobs outlook, feeling better than they have in months. "The latest gains are striking," said Lynn Franco, Conference Board economist. "The jump in the Present Situation Index is the largest gain experienced in 25 years, while the Expectations Index has not risen this sharply in nearly a decade. This new boom in confidence should translate into increased consumer spending and stronger economic growth ahead."

Consumer confidence by region

New England +3.3%
Middle Atlantic +14.3
East North Central +23.9
West North Central +6.5
South Atlantic +20.0
East South Central +13.5
West South Central +16.7
Mountain +13.2
Pacific +7.2

Consumer Buying Plans — March
plans to purchase over the next six months

Source: The Conference Board
Homes -17.9%
Cars -17.3
Major appliances -0.7
Carpets +46.7
U.S. vacation +7.0
Foreign vacation +1.2

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