The US GDP is expected to increase by 2.5% in 2025, and the home furnishing industry is "lagging behind"?

  The new US government and the policy changes it foreshadows make the economic outlook for 2025 slightly cloudy.

  The current US unemployment rate is about 4.2%, and it is expected to rise slightly throughout 2025. However, economists say that if immigration policies are tightened, the unemployment rate may fall to around 3.5%. Both global and US economic growth are expected to be solid in 2025.

1. Will US GDP growth continue to lead, but the home furnishing industry will fall behind?

  The Goldman Sachs research team predicts that the US real gross domestic product (GDP) will increase by 2.5% year-on-year, while Goldman Sachs expects global GDP to increase by 2.7%, with China (4.5%) and India (6.3%) leading the growth.

  "Inflation has fallen sharply over the past two years, which is a key reason to be optimistic about global economic growth," said Jan Hatzius, chief economist at Goldman Sachs. "Price inflation has fallen much faster than wage inflation, which directly boosts real incomes." He also said: "We expect productivity growth in the United States to be significantly higher than in other regions, which is a key reason why we believe that US GDP growth will continue to lead."

  Despite the overall positive outlook for the economy, the home furnishing industry is still expected to lag after a brief boom during the pandemic. FurnitureToday's recent survey on tariffs showed that people are worried that price increases will be passed on to consumers, who are already cautious about purchasing big-ticket items, and the industry may need to explore new domestic and foreign sourcing channels.

  In addition, the entire industry experienced a large number of retail store closures in 2024, including the closure of top 100 retailers American Freight, Conn's/Badcock and Sam Levitz, and Big Lots' significant reduction in store count, which reduced the industry by hundreds of stores. As a result, FurnitureToday's strategic insights department predicts that furniture store sales will increase slightly by 0.3% in 2025, and consumer spending on furniture and bedding will increase by 1.7%. In 2024, consumer spending on furniture and bedding is estimated to fall by 3% from the previous year, and store sales will fall by 4.9%.

  Consumer spending is expected to improve in the fourth quarter, but as Satyam Panday, chief economist of S&P Global, explained in his first quarter outlook for 2025: "The days of big growth may be over. Over the past six months, the monthly growth rate of real personal disposable income has been lower than the growth rate of consumer spending, and total household spending may slow in the coming quarters."

  Pandy also said: "Cost pressures, especially rising costs of non-discretionary services, may curb consumer growth in non-essential spending, including holiday shopping. Cost pressures may mean that value propositions will have a greater impact on consumer decisions in the future."

2. There is light in the real estate market, and home consumption has new opportunities for growth!

  While a boom in the housing market doesn't necessarily lead directly to more furniture sales, the home furnishing industry is keeping a close eye on the health of the housing market, hoping that an upturn in the housing market will prompt a certain percentage of homebuyers to invest in new home furnishings.

  Looking ahead to 2025, Skylar Olsen, chief economist at Zillow, expects homebuyers to have an easier time. "In 2024, competition for home purchases was extremely fierce and the cost of home purchases was incredibly high. More listings are expected to be available in 2025, giving homebuyers more breathing room." Fluctuating mortgage rates in 2024 are expected to fall from their current level of nearly 7% to closer to 6% or just below 6% by the end of 2025.

  Lawrence Yun, chief economist of the National Association of Realtors, said the era of low mortgage rates is over, even though rates are trending downward. "Can we get back to 4% interest rates? Unfortunately, I predict no. It's more likely to go back to 6%. That will become the new normal, fluctuating between 5.5% and 6.5%," he said at an economic and trends forum in early November.

  Lawrence Yun expects existing home sales to grow 9% year-over-year in 2025, and new home sales to grow 11%. However, he also expects the median home price to continue to rise to $410,700, up 2% from 2024. Lawrence Yun also said that homeownership rates among young Americans remain low and first-time buyers still face difficulties entering the market.

  Danielle Hale, chief economist at Realtor.com, said in her forecast that real estate industry sales are expected to increase by about 1.5%, which she attributed mainly to broader economic factors rather than new federal policies, while home prices will rise by 3.7%.

  "President-elect (Donald Trump) can work quickly with his administration to implement some regulatory changes, but other policies that affect real estate, such as tax changes and overall deregulation, require cooperation from other branches of government and all levels of government," Hale said. "The extent and direction of the impact of Trump's policies will depend on what campaign proposals ultimately become policy and when they are implemented.

  For now, we expect the real estate market to gradually improve, driven by broader economic factors. The policies of the new administration have the potential to help or hinder the recovery of the real estate market, and the specific details will be crucial." Hale expects mortgage rates to be above 6% for most of 2025, gradually falling to around 6.2% by the end of the year. She also said that as more listings come online, rental prices will stabilize.