Rate Cuts, Falling Confidence, and Port Strikes. What's Ahead for Furniture Retail

Originally published September 25, 2024. This version was rebuilt from the Federal Reserve's statement, The Conference Board and ILA statements for the FIN archive, and the facts are as of that date.

A week after the Fed's rate cut, consumers turned more cautious and the clock ran down on the East and Gulf Coast port contract.

The short version

• The Fed lowered the target range by 1/2 percentage point to 4-3/4 to 5 percent.
• The Conference Board's Consumer Confidence Index fell to 98.7 in September from 105.6.
• The ILA said a strike at 12:01 am on October 1 seems more likely.

Federal Reserve cuts interest rates

On September 18 the FOMC lowered the federal funds target range by 1/2 percentage point to 4-3/4 to 5 percent, and said it had gained greater confidence that inflation was moving toward 2 percent.

Lower rates help furniture retailers in two ways over time, by lowering the cost of promotional financing and by easing the mortgage costs that hold back home sales. Neither effect shows up overnight.

Decline in consumer confidence

The Conference Board said its index fell in September to 98.7 from an upwardly revised 105.6. The Present Situation Index fell 10.3 points to 124.3 and the Expectations Index fell 4.6 points to 81.7.

Its chief economist said it was the largest since August 2021, with all five components deteriorating. Consumers were more pessimistic about future jobs and less positive about future income.

Weaker confidence about jobs and income is a warning sign for big-ticket categories like furniture heading into the holidays.

Preparing for potential disruptions

On September 17 the ILA said tens of thousands of longshore workers were ready to strike, and that a coastwide walkout at 12:01 am on October 1 seems more likely as time ran out to reach a new Master Contract.

ILA delegates had already unanimously supported the strike call on September 5. Importers had days, not weeks, to finish contingency plans.

Recap

Cheaper money was on the way, but consumers were nervous and a port strike was close. Furniture retailers headed into the fourth quarter with more uncertainty than relief.

Related on FIN

• Furniture Shoppers Are Holding Back
• The Freight Mafia's New Playbook

Sources

• Federal Reserve, FOMC statement (Sept. 18, 2024)
• The Conference Board, US consumer confidence fell in September (Sept. 24, 2024)
• International Longshoremen's Association, Rank and file ready to strike on October 1 (Sept. 17, 2024)
• International Longshoremen's Association, Wage scale delegates back call for October 1 strike (Sept. 5, 2024)