The American Society of Interior Designers (ASID) shares a cautiously optimistic outlook in its upcoming 2024 Economic Outlook Report, highlighting realistic challenges interior designers will face in business.
The report analyzes the current state of the economy and provides designers with insight on the influence of the economy across all sectors of the design profession and the greater industry of the built environment.
Key insights from the report explore the economic impact on employment, trade, recession, hospitality, the workplace, and more:
Competition to secure and retain talent has driven wages and salaries higher, however rising labor costs could contribute to higher inflation. Labor cost increases have decreased, and the outlook for 2024/2025 is for sustained employment growth.
Inflation has moderated but remains above the Federal Reserve (The Fed)’s goal of 2%. The Fed has said they expect to keep interest rates at their current level until the inflation rate has fallen to 2% and is likely to remain steady at that rate. Meanwhile, analysts expect the Fed will make one rate in 2024. Should the inflation rate spike or appear resistant to further decline, the Fed would undertake at least one more rate hike of 0.25% - though this is unlikely.
State and federal government money for renovating and upgrading existing educational facilities as well as building new facilities is now flowing more freely. Education construction spending will increase healthily in 2024 and climb at a solid but slower rate in 2025.
Spending on lodging construction began to rise, surging in 2023, as travel rebounded over 2022 and 2023. With much of the needed work done and facing high interest rates and high construction costs, lodging construction spending will be down in 2024, but will increase a modest amount in 2025.
Spending in residential improvements was robust between 2020-2022 as remote work and childcare issues fueled demand for home additions and renovations during and after the pandemic. With many of those improvements now complete, coupled with high interest rates and construction costs, the demand for improvements is falling—resulting in lower spending on residential improvements in 2024 and 2025.
High and rising vacancy rates in office spaces have forced property owners to lower office rents., With lower rents and higher vacancy rates, property owners have faced revenue losses, raising the possibility they will default on their mortgage loans. Numerous defaults could in turn lead to bank failures, posing a threat to the overall economy. Office construction spending will be up slightly in 2024 and 2025, with most of the spending directed toward renovating existing office space to compete in a tough market.
