Furniture Industry Insights. Fed Moves, Consumer Spending, and Big Retailer Shake-Ups

Originally published August 30, 2024. This version was rebuilt from the Fed chair's Jackson Hole remarks, BEA's personal income and outlays report and Big Lots' 8-K for the FIN archive, and the facts are as of that date.

Heading into Labor Day weekend 2024, the Fed signaled rate cuts were coming, consumers were still spending and a major discount chain was preparing to shrink.

The short version

• Fed Chair Powell said the time has come for policy to adjust.
• BEA said personal consumption expenditures increased 0.5% in July.
• Big Lots' lenders agreed to increase permitted store closings from 150 to 315.

Fed rate cuts. What they mean for furniture

At Jackson Hole on August 23, Chair Powell said upside risks to inflation had diminished, downside risks to employment had increased, and the time has come for policy to adjust. He said timing and pace would depend on incoming data.

Lower rates matter for furniture through mortgages, which drive home sales, and through consumer financing on big purchases. The effect would build over months rather than show up in Labor Day sales.

Update. The Fed cut rates by half a point on September 18.

Consumers keep spending

BEA said personal consumption expenditures increased $103.8 billion, or 0.5%, in July. The PCE price index rose 0.2%.

Steady spending with mild inflation gave retailers some confidence going into the holiday promotions, though furniture was getting a smaller share than services and everyday goods.

Big Lots prepares to shrink

In an 8-K filed August 2, Big Lots said amendments to its credit agreement would increase the number of permitted store closings from 150 to 315, cut lender commitments from $900 million to $800 million and raise its interest rate by 50 basis points.

Big Lots was a major discount seller of furniture and home goods, so a large wave of closings would change the value end of the market in many towns.

Update. Big Lots filed for Chapter 11 on September 9 with a Nexus sale agreement, and Gordon Brothers completed a purchase in January 2025.

Looking ahead

The Fed's signal, steady spending and a shrinking discount competitor set the stage for the fall. Furniture retailers would need lower rates to reach housing before demand could truly recover.

Related on FIN

• Furniture Shoppers Are Holding Back
• Every Door in Town

Sources

• Federal Reserve, Chair Powell, Review and Outlook, Jackson Hole (Aug. 23, 2024)
• Federal Reserve, FOMC statement (Sept. 18, 2024)
• U.S. Bureau of Economic Analysis, Personal income and outlays, July 2024
• Big Lots, Inc., Form 8-K, credit agreement amendments (Aug. 2, 2024)
• Big Lots, Inc., Sale agreement with Nexus Capital Management (Sept. 9, 2024)
• Gordon Brothers, Completes Big Lots purchase (Jan. 2025)