Like pretty much everyone else out there, I am at a loss as to when we will truly be out of this recession. Two years ago, when it became clear that there was trouble on the horizon, the general consensus was that we would see some sort of downward financial “adjustment,” but it likely wouldn’t be long term - and certainly not this severe. By early 2008, as the financial downtrend began to exceed expectations, there still remained a solid measure of confidence that a rebound would be in effect by mid-2009. And now, it seems many of the financial “experts” you see on television are getting even more vague with their forecasts. It seems safe enough to say, “There are signs of recovery, but it will be slow,” so that’s what most of us are hearing over and over again.
But what does that really mean for our industry? Given the stone industry’s obvious dependence on the residential market, I’ve been paying close attention to the reports being released by the National Association of Home Builders (NAHB). These reports are based on in-depth research and statistical data, and they are more positive now than they have been in months (or even years):
• On August 6, NAHB reported that residential remodeling showed gains during the second quarter of 2009 - with increases in all indicators - according to the latest NAHB Remodeling Market Index (RMI). “With more calls from homeowners and more projects under way, remodelers are seeing better activity in their businesses,” said NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, CGP, a remodeler from Tucson, AZ. “Although remodeling jobs are still harder to find, homeowners are showing more interest in remodeling spending.”
• In that same report, NAHB stated that a significant portion of the market improvement came from the measure for major additions and alterations - jobs worth $25,000 or more. (That means these homeowners are likely buying stone.) Indicators for current remodeling market conditions improved across all regions of the U.S.: the Northeast, the Midwest, the South and the West.
• On August 17, NAHB reported that builder confidence in the market for newly built, single-family homes rose one point in August to its highest level in more than a year, according to the latest reading of the NAHB/Wells Fargo Housing Market Index (HMI).
• On August 18, NAHB reported that production and permitting of new single-family homes continued on an upward trajectory in July, according to numbers released from the U.S. Department of Commerce in mid-August.
“One very positive aspect of [the August 18] report is the big gain registered in the component gauging homebuilders’ expectations for the next six months,” stated NAHB Chief Economist David Crowe. “This reflects anticipated sales stemming from the tax credit as well as recent signs that an economic recovery has begun. There is definitely a sense of hope among builders that the worst of the downturn is over and that a turning point is near at hand. Meaningful action by Congress could ensure that this upward momentum continues and that housing can help push the economy back onto solid ground.”
OK, so there are some very positive reports floating around out there. But at the same time, it seems that there are countless self-proclaimed “financial analysts” on mainstream television telling people to stay home, clip coupons, knit their own clothes and essentially live their lives in a perennial state of economic fear. (I find the ones appearing on morning shows like “Today” and “Good Morning America” to be particularly annoying and trite, but maybe that’s just me.)
When Mary Ann Homeowner (or her husband) is continually being told that they “have to do more with less” (whatever that means), it makes it that much more difficult to convince them to go out and spend a few thousand dollars on a new granite countertop. But according to the NAHB reports listed above, there are plenty of brave souls out there investing in housing - and lots of them want stone.
On another positive note, stone imports to the U.S. have steadily increased this year. After dropping to a total of only $83.335 million in February, the worst total in several years, the value of stone imports to the U.S. grew to $122.15 million this past May - the most recent month tallied by the U.S. Department of Commerce. That’s a growth factor of nearly 50% from when we hit bottom.
I’m certainly no expert in economics (and it appears that many of those designated with that title aren’t all that shrewd, either), but I truly believe that one key to the recovery is plain old consumer confidence. Most of us have been beaten down by this recession in one way or another, but seeing the light at the end of the tunnel - and showing it to others - might help us all get back on our feet again.
Positive indicators versus a lack of confidence
September 1, 2009