The analogy that best matches the many months of anticipation leading up to an expected economic downturn is weather-related. During the winter in the northern parts of the country, TV weathermen will sometimes see conditions setting up for a snowstorm emerging more than one week away, sometimes as far as 10 days away. And with that information, they will dig into the details of the snowstorm to come.
The European weather model might forecast 8 to 10 inches of snow while the Global model might predict fewer amounts. And with each passing day, the anticipation for the snowstorm grows. The wall-to-wall coverage of it has to be great for local TV ratings. After a few days, the storm might even get a name or an informal tag like “Snowmageddon 2023.” Meanwhile, the storm is still several days out.
Storms with long lead-times sometimes arrive on schedule with all their predicted fury. TV weathermen are proved to be correct. But more often than not, a storm’s impact does not match the hype. It shifts a little to the north or to the south. The jet stream changes trajectory. In the meantime, residents have stocked up on supplies. Kids who had their hearts set on a snow day are disappointed.
That’s how some remodelers and home improvement pros must feel right now as the long-predicted economic downturn has yet to materialize. Quite to the contrary, Qualified Remodeler’s U.S. Remodeler Index experienced a bump up in Q1. Analysis from our partners at John Burns Research and Consulting suggests the market will grow in the range of 3 percent to 5 percent in 2023.
It is next year when they predict a slower remodeling market. A similar forecast by Harvard University’s most recent LIRA, the Leading Indicator of Remodeling Activity, points to a slowdown in remodeling activity of a few percentage points in 2024. We’ve got a story about their forecast in this issue too.
Back to the weather analogy: I pay close attention to the TV weather forecasts when they are within 24 or 48 hours. They seldom miss the mark when talking about temperatures and conditions for the following day. But when a storm is days away, I don’t interrupt my normal routine. I expect to drive to work the morning of the predicted storm until the conditions merit a change.
That is where I think the remodeling industry stands today when it looks at future demand. Remodeling grew rapidly in 2020, 2021 and 2022. And, so far, 2023 is looking pretty good. Backlogs are part of the story, but there’s still job growth happening. People might be scaling back their projects due to the impact of inflation on their budgets, but there’s a good indication that they are moving forward.
While it is prudent to be ready for an economic slowdown because of interest rate hikes, there’s no clear evidence yet that a full-blown recession is coming. Always be ready for the unexpected, but there’s no sense letting extra precautions get in the way of the opportunity found in this current remodeling market, which remains rather robust. QR