New Orleans—“We are not in a recession, we’re not headed for a recession, and there is a lot of opportunity out there.” That message was at the heart of a keynote presentation delivered by ITR Economics’ Lauren Saidel-Baker at the 2024 North American Association of Floor Covering Distributors (NAFCD) and North American Building Material Distribution Association convention held here in late October.
While Saidel-Baker noted that some industries are in “outright decline” and that others are certainly headed there, the vast majority of the key market sectors of importance to the industry are projected to show growth next year, certainly late 2025. “We do have a few good years ahead of us despite all of that uncertainty,” she told attendees.
The economist brushed off mainstream media talk of an impending recession, citing the classic, historical definition of a recession (two consecutive quarters of GDP declines). That, she said, is not showing up in the numbers. “I read a lot of headlines; they’re saying, ‘Is a recession coming?’ But if you just look at the U.S. gross domestic product track, you’ll notice GDP is actually rising. This is not a recession. In fact, GDP today is higher than it has ever been in our country’s history. However, what is changing is the pace of that growth. The year 2024 is still on the right side of things. We’re still in positive territory, but just at a much slower pace than we have seen, especially in this bounce back from the COVID-19 pandemic.”
Saidel-Baker also quashed the notion that the results of the 2024 Presidential election will directly impact the fortunes of the U.S. economy or the flooring distribution industry. As an unabashedly apolitical forecasting firm, ITR Economics has long held the position that having a Republican or Democratic in the White House in and of itself does not serve as an indicator of economic outcomes. Rather, ITR Economics bases its forecasts on a variety of indicators and complex formulas. During her presentation, Saidel-Baker pointed to a slide that indeed shows no direct correlation between the political party in power and overall economic growth.
“The No. 1 question that I get when I’m out on the road is, ‘How will your forecast change as a result of the wins in November?’” Saidel-Baker stated. “The great news that I have for you is that we at ITR are nonpartisan. We are apolitical, and historically we just don’t find that the economy has a favorite political party. So we have run these numbers every which way we can think of—i.e., who’s in the presidency, who controls the House and Congress, etc. There are a couple of recessions that align with an election year, but spaced out here every four years, GDP just doesn’t respond to presidential elections.”
At that point, Saidel-Baker pulled up a side showing a quote from Warren Buffett, chairman of Berkshire Hathaway (a.k.a the “Oracle of Omaha”), who’s notorious for his knack for picking winning investments. “He said, ‘red or blue, I can still make green,’” the economist told attendees. “I think that’s the best way to take our political reality. We will not be changing our forecast based on the winner. We can all just keep planning for our business. These big fundamental drivers, they’re still very much in place. They won’t change based on the election.”
Distributors, for their part, hope that reason and logic prevail, no matter which candidate prevails on Election Day. “I hope that whatever administration is next in our country that they take a data and analytically based approach to making decisions that are going to affect our economy,” AJ Warne, vice president of sales and marketing of Abraham Linc and past NAFCD president, told FCNews during a roundtable discussion at convention. “I think that it’s very easy to get wrapped up in the emotion of what goes on in the world, like we were talking about earlier with respect to onshoring, nationalism or patriotism. Taking a data-driven approach to making decisions that are going to affect the economy and the livelihoods of people is really important.”
As an example, Warne cited a separate but related conference presentation conducted by the tag-team tandem of Eugene and Alex Chausovsky, experts in geopolitics and global economics, respectively. The duo dove into a detail-driven presentation of world events and the current and potential impact on the U.S. market. “Earlier during the conference we heard Alex Chausovsky talking about the potential impact of a tariff-driven approach to funding the tax base in our country and what the result would be for individuals in the country,” Warne recalled. “It’s one of those things that if you take an emotional approach, it seems like a very good idea. But when you take a practical, economics and data-driven approach to it, it’s clear this is going to be something that increases the tax burden on all of our employees and all of us, and it might not necessarily be something that would be a decision made from an economics perspective.”
That’s a critical point that Chausovsky drove home to attendees. “Our goal is to connect the dots between geopolitics and the U.S. economy and your business,” he said. His overarching message to attendees: “You have to be both aware of the opinion world and the factual world. Your job as business leaders is to cut through all that noise and make informed decisions.”
In that vein, one of the most important decisions/dilemmas that flooring distributors wrestle with—particularly in a post-COVID-19 world—is how much they should rely on imported product. During her presentation, Saidel-Baker suggested that nationalism might serve as a buffer to alleviate some recurring supply chain issues importers and distributors deal with amid global conflicts. However, nationalism is not necessarily a cure-all for distributors.
“When you talk about nationalism, everything sounds fantastic,” Brian Green, incoming NAFCD president and chief sales and marketing officer for UCX, told FCNews. As an example, he cited the focus on sustainability in building. “It was great until somebody had to pay for it. The unfortunate aspect of production is there’s a point where container costs start to offset. We want to support that as much as possible and we have options but, unfortunately, it’s really hard for the domestic manufacturers to fight against the imports. I think everybody loves the idea of nationalism, but when it’s time to spend, if it’s going to cost 30% more for a domestic product, [consumers are] probably going to go the other route.”
Gammonley honored for his legacy of industry service
Attendees had the opportunity to personally congratulate former NAFCD executive vice president, Kevin Gammonley, who received special recognition for his service to the distribution industry during the convention. Gammonley, who officially announced his retirement from NAFCD+NBMDA earlier this year, served as executive vice president of NAFCD for the past 13 years and executive director of NBMDA for 33 years.
“Kevin has been instrumental in the continued growth of our organization over those years and will be truly missed,” said Jim Plunkett, outgoing NBMDA president. “We want to wish him very well in retirement and enjoying time with his family.”
In his acceptance speech, Gammonley looked back on his lengthy career. “It’s been a great 34 years in running distributor trade associations,” he told attendees. “I’ve had the pleasure of working with some of the industry leaders over the years, just seeing how they made decisions and navigate this marketplace. The one thing I have learned about distributors is they are survivors; they figure things out and they adapt their businesses. They morph with the times and figure out how to serve customers. It’s been really exciting and insightful to watch that firsthand.”
Gammonley also took a moment to recognize those who have helped him along the way. “I want to thank all the industry leaders I worked personally with over the years, and I want to thank the NAFCD and NBMDA staff who have supported me and made me look good. It’s been a great experience. Most of all, I want to thank my wife, Angela, who kept the household going with our four kids while I was planning conventions like this and working with you guys.”
Michael Wilbur, the new NAFCD executive director, made his official introduction to the industry at the October conference. Gammonley offered his vote of confidence. “The associations are in great hands with Michael Wilbur,” he said. “He’s a really young, bright, energetic guy, so things are going to go well.”
(Look for more coverage of the 2024 NAFCD convention in future editions of FCNews.)
The post NAFCD: Outlook bodes well for those who plan ahead for growth appeared first on Floor Covering News.