Hardwood Floors December 2024/January 2025

By Santo Torcivia

KEY ASSUMPTIONS AND STRENGTHS OF THE U.S. ECONOMY: Housing starts currently are above 1.35 million units annually and will continue to aid economic growth through 2029, with starts averaging 1.5 million units. Starts increasingly favor single family units (70 percent of total starts), which average 50 percent greater floor area over multi-family units. Housing construction is getting a push from builder incentives, baby-boomer downsizing with generally considerable equity to offset higher home prices and interest rates, and investment firms financing single family homes built for rent. Residential home improvements will grow slowly through the first half of 2024 and then accelerate in the second half of 2024, growing at a moderate clip throughout the forecast period as households, unwilling to sell their current low interest financed homes in a desirable neighborhoods, remodel their residences.

Consumer spending is slowing as many consumers’ finances are being stretched by inflation, rising debt levels, and slowing employment growth. Real personal disposable income will grow at an inflation adjusted annual rate of 2.0 percent or greater through 2028, largely driven by moderate growth in skilled and technical worker employment increases and wage growth. Income growth will endure headwinds resulting from weak employment growth due to automation and a decline in unskilled labor jobs through 2029. Non-residential building construction will grow throughout the forecast period, especially for education, transportation facilities, health care, lodgings, and institutional building types. Conversely, office, religious, amusement and recreation, and retail building construction, except for retail warehouses, will decline slightly. FACTORS THREATENING THE U.S. ECONOMY INCLUDE: • High energy prices impact all areas of the economy. • Inflation will continue to be an issue among key commodities. Inflation saps consumer spending power and reorders the

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