Appliance Output Will Rise in 2013

The data measuring total U.S. output of household appliances last registered a cyclical peak in 2004, and the industry has been declining ever since. That makes eight consecutive years in which the appliance industry in this country has been in a recession. During this time the industry contracted by 33 percent. The good news is that I expect this streak to end in 2013. The bad news is that the annual increase this year will be moderate at best. The latest forecast calls for a gain of 5% to 6% in total U.S. output of household appliances when compared with 2012.

There are two factors that will prompt growth in appliance demand this year. Most important is the continuing recovery in the residential construction and real estate sectors. Appliance demand took a nosedive right after the housing bubble burst in 2008, and it then flatlined at historically low levels for the past three years. The long-awaited recovery in the housing market started to gain momentum last year, and this will spur demand for new household appliances for the next few years.

The other factor that will prop up demand for appliances in 2013 is the fact that the average age of durable goods in America is higher now than it has been for the past 60 years. After the last recession, consumers were reticent to purchase big-ticket items. They chose to avoid debt, and instead pay off their credit cards. But things are now starting to wear out and need to be replaced. This replacement demand has already started to show up in the data measuring auto demand, and it will now start to positively affect the appliance industry data.