Hardwood Floors February/March 2026

INDUSTRY INSIGHTS

MARKET MATTERS

Confusion

STATE OF

ADOBESTOCK ©

The U.S. economy is in a state of confusion with some segments strong and some weak. The net effect of these offsetting forces is slow growth in the short-term (2025 2027 of 1.9 percent), and growth accelerating slightly in the longer term (2009-2030 of 2.5 percent). Some of the segments considered stronger are as follows: • Consumer spending continues to grow despite headwinds posed by inflation, weak disposable income, and weak household growth. • Artificial intelligence has and will continue to enhance productivity, spur construction in energy production facilities, and accelerate the repurposing of buildings, especially offices.

• Interest rates will continue to fall as the Fed reduces the discount rate, improving housing affordability, reducing commodity pricing, and mitigating the impact of tariffs. • Inflation will decline as energy production ramps up and core-inflation continues to fall toward the Fed’s target rate of 2.0 percent. • Real disposable personal income growth continues to increase and is exceeding the core inflation rate of growth. • Housing starts are increasing as interest rates fall and builders offer interest rate buy-downs and purchase incentives. • Existing home sales, currently averaging a weak 4 million units annually, are forecasted to return to 5 million units per annum in 2027 as interest rates fall and affordability becomes tenable.

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