ASID Releases 2023 Economic Outlook Report
(July 26, 2023 – Washington, D.C.) –– Today, the American Society of Interior Designers (ASID) released its 2023 Economic Outlook Report, an analysis of the current state of the economy, including its impact on the interior design industry, profession, and practice. Following the COVID-19 pandemic and a two-month recession at the beginning of 2020, the report highlights economic indicators, shifts, and progression as they apply to interior design.
“Designers embody resilience and agility,” said Khoi Vo, chief executive officer, ASID. “This body of work examines the economic recovery following the pandemic and highlights designers’ abilities to adapt and excel. ASID is proud to equip the design community with tools needed to inform and improve their practice through the Outlook series of research, and this report, which reflects extensive, dedicated work from the ASID research team, provides us with insights that allow practitioners in all sectors to anticipate and prepare for future economic shifts and trends.”
The third installment of the three-part Outlook research report series, the Economic Outlook, is compiled by ASID to provide interior designers key economic data and predictions to navigate their business and the industry through the year. The report looks at how the economy has changed over the course of the years during and following the pandemic.
Key insights from the report explore the economic impact on employment, trade, recession, hospitality, the workplace and more:
National employment has bounced back from its initial sharp decline in early 2020 and is now above its pre-pandemic peak. Employment has continued to rise every month since June 2022, but high-interest rates and a likely recession this year will mean downward pressure on interior design services employment in 2023 and into 2024. Construction on single-family housing fell sharply in the first half of 2020 due to the pandemic, but just as quickly, single-family construction activity surged in the second half of 2020, exceeding pre-pandemic levels. Those new housing starts largely held steady in the first quarter of 2022, then began a decline as the Federal Reserve began raising interest rates to combat inflation.
The pandemic disrupted trade on multiple fronts, leading to many of the supply chain issues. Now, most supply chains have returned to normal. The backlog in shipping has largely disappeared, and the costs for both shipping containers and ships to transport them have fallen sharply from the stratospheric heights during the pandemic.
The report forecasts the economy going in one of two paths: a soft landing or deep recession. The reemergence of supply chain issues, the sharp increase of oil prices, widespread bank failures and federal spending are indicators of a possible recession that professionals should look out for in the coming years. There is a reasonable, though small probability of a soft landing. Designers should watch carefully to see if supply chain issues reemerge, oil prices rise sharply, bank failures become more widespread, federal spending experiences a major reduction, or taxes increase sharply.
The COVID-19 pandemic had a huge impact on the collapse of the travel industry. As a result, construction spending on lodging tumbled and finally, after it bottomed in 2021, rose throughout 2022. With a partial rebound in leisure travel that benefitted the hospitality/lodging industry, this year, lodging construction spending is expected to surge up 22%.
In general, most major cities have excess office space in their downtown areas, though vacancy rates have fallen somewhat as some workers return to the office. Newly constructed offices include amenities such as gyms, eateries, drug stores, and other retail options.
More insights from the report include information on the economy’s effect on retail, senior housing, single and multi-family construction, and monetary policy predictions for 2023 and beyond.