Pondering the impacts of the midterm elections

HomeFeatured PostPondering the impacts of the midterm elections

electionsThe midterm elections created what many flooring executives say is a desirable outcome—a divided government with Republicans narrowly winning the House, and Democrats maintaining control of the Senate by the slimmest of margins. According to political pundits, the likely impact of these midterm elections will be felt primarily in U.S. fiscal policy. Observers say the House will seek to restrain federal spending through budget negotiations with the Biden White House and Democrat-led Senate to prevent further tax increases.

Experts predict the likely result will be governmental gridlock—which, for some leaders, might not be such a bad thing.

FCNews reached out to several key leaders in the flooring industry for their perspectives on the matter.

Focus on the things you can control

“Bottom line, the midterms will not demonstrably hurt or help business come 2023. Small business owners will again be up to the challenge as they are not highly leveraged like larger public companies with debt-to-equity ratios that are unsustainable; higher interest rates will make it almost impossible to service the debt forcing some big companies to file bankruptcy.

“Flooring dealers across the spectrum have tightened their belts, monitored cash flow and cut back on inventory where they can without jeopardizing their ability to service their customers.

“The biggest challenge retailers face today is labor. It continues to be a bottleneck to growth. As we enter 2023, we look to the retail replacement market and property management to fuel our business. Yes, foot traffic may be down but those customers walking through our doors are going to buy, and the tickets seem to be much bigger. Consumers have built up some equity in their home over the past two years and will continue to increase the value of their home by making sizable improvements including floor covering. Simply put, focus on what you can control and Washington be damned.”

—Olga Robertson, FCA Network, Shorewood, Ill.

More action expected at the local level

“A lot of what I see in terms of the Federal government’s impact on our industry flows more from federal agencies rather than Congress. While the framers of our government might cringe at this reality, it is the one I see, and that reality is tied more toward presidential election years than midterms. I do think there will be more of an impact at the state and local level from the recent elections as a certain amount of policy making relevant to floor covering is driven more locally. There was a lot of interest in state and local races this cycle, which I think was nice to see from a broader, political spectrum—regardless of any particular viewpoint. In turn, those officials assuming office are likely to feel more accountable to their electorate, and so depending on the prevailing winds in particular jurisdictions we might see policy shifts that do impact our business.”

—Scott Rozmus, FlorStar Sales, Romeoville, Ill.

Looking for a semblance of stability

“The midterms being over has gotten rid of some of the uncertainty that ultimately surrounds elections of this magnitude. Business is always affected during election years and typically—no matter who the winner is—once they are over, it brings back a certain level of stability to the economy. The economic conditions around the country continue to be a concern for all of us and—with that—the government’s actions can help control some of that impact on all of us. We expect business to continue to be good in our area for the next year or possibly longer due to Hurricane Ian and the massive flooding of homes that was experienced.”

—John Taylor, Taylor Carpet One Floor & Home, Fort Myers, Fla.

Embracing a divided government

“All indications are that 2023 is going to be a very challenging economic year. However, I believe it would be even more challenging if we only had one party in power. With the midterm elections resulting in a divided government, I think we’ll have more inherent controls in place to limit extreme decisions by either party. Hopefully, both parties will focus on controlling inflation before the negative effects create longterm damage too difficult to
overcome.”

—Kelby Frederick, My Flooring Texas, Houston

Politics has no bearing on my business

“To me, politics doesn’t factor into business—it’s just noise. We focus on growing market share. As with most dealers we only have a small slice of the pie. Our slice of the pie has the ability to grow under red leadership, blue leadership or no leadership at all. At this point, the Fed rate decisions will likely have a greater impact on our business than politicians will.”

—Adam Joss, The Vertical Connection Carpet One, Columbia, Md.

Checks and balances in decision making

“There was a definite lull in business leading up to and immediately after the midterms. Once the craziness died down business seems to have perked back up. People seem to believe the split will be good to put some sort of checks and balances into the decision making. I truly believe most of the country would like to stay in the middle with policies rather than caving to the far left or far right. As long as we can get to some type of normal, I believe it will carry purchasing demand into the new year and forward.”

—Mike Foulk, Foulk’s Flooring America, Meadville, Pa.

More concerned about interest rates

“While the midterm results are important, we remain focused on the economic impact caused by increasing interest rates and inflation. Important leading indicators for flooring—along with new housing starts—are interest and mortgage rates. Increases in mortgage and interest rates had an adverse impact on our industry in 2022. We are cautiously optimistic about the impact for 2023 and are hopeful rates will begin to decline for homeowners and commercial businesses looking to invest in new build or renovation projects. We are hopeful that the new Congress, along with the Fed, will take the necessary steps to help
stabilize the economy.”

—Ted Kozikowski, Galleher, Santa Fe Springs, Calif.

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Jan. 23/30, 2023

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