Furniture and Appliance Purchases off Lows

The Bureau of Labor Statistics recently reported results from the 2013 consumer expenditure survey. In 2013, the average annual expenditure on housing increased 1.5% to $17,148. As a share of total expenditures housing was 33.6%; an increase from the 2012 share of 32.8%.

The increase in housing expenditures is the result of rising home prices and rents as well as changes to expenditures on major appliances and furniture. In 2013, for example, average annual expenditure on major appliances increased 8.6% to $214. The recent peak average annual expenditure on major appliances of $241 occurred in 2006.

At the same time average annual expenditures on furniture, however, decreased 2.3% to $382. The average annual expenditure on furniture is still well below the recent 2006 peak of $463 but above the recent 2009 trough of $343.

Chart1

Data from Bureau of Economic Analysis (BEA) confirms this cyclical trend in furnishings and durable household equipment purchases. The personal consumption expenditures on furnishings and durable household equipment declined noticeably during the economic downturn. The expenditures on these goods, however, have rebounded bolstered by subsequent improvements in consumer confidence and consumer credit. The 2014 second quarter reading of $322.1 billion seasonally adjusted at an annual rate was a 33.7% improvement over the recent low of $240.9 billion from the second quarter of 2009.

Chart2

Although consumer expenditures on major appliances and furniture are a relatively small share of total expenditures, the data can help demonstrate the relationship between these types of expenditures and broader economic conditions. In addition, the data can help demonstrate the ripple effect of home buying. In fact, using the same survey NAHB estimates that a new home buyer spends $3,000 more on furnishings than an otherwise identical non-mover. All else equal, one could expect to see more purchases of furniture and major appliances in a healthy housing market.



Tags: , ,