Strategic Exchange: What does economic crystal ball portend? – Nov 2025

By Kemp Harr

Based on historical economic cycles, we’ve learned that the housing market has to recover before demand in the commercial market will pick up. At the fall Starnet meeting, held the last week of October, ITR Economics presented something of a mixed forecast that left many in the room scratching their heads. Mortgage rates will come down as the Fed drops interest rates this fall. But, ITR is forecasting inflation to rise to 4.75% by mid 2026, and the Fed will have to respond with higher interest rates. The big question is whether this window of lower rates will be long enough for the housing market to react and create more demand for flooring. One thing is for sure: consumers are going to realize that rates aren’t going back down to where they were anytime soon. 

Part of what’s keeping consumer sentiment so low-it’s down 24% from this time last year-is uncertainty about where the economy is headed. Some of that is being driven by the news of these wide swings in the reciprocal tariffs being levied. Consumers are worried about just how much products are going to cost when the dust settles.

Isn’t it interesting that all three U.S. stock market indexes reached an all-time high in the middle of a prolonged government shutdown? One could surmise that investors like it when Washington is not spending money or debating new laws.

AMERICA’S THREE BRANCHES OF GOVERNMENT

I’m going to work hard here not to break our rule about commenting on politics, but I feel you need to be made aware of the impact that the U.S. Supreme Court’s (SCOTUS) November 5 hearing could potentially have on the U.S. Constitution as well as on our founding fathers’ insightfulness to structure this Republic with the checks-and-balances system that three branches of government are designed to provide. 

In case you’re unaware, SCOTUS has cleared its docket on November 5 to hear arguments on both sides as to whether the reciprocal tariffs that have been implemented under the International Emergency Economic Powers Act (IEEPA) are legal. The ramifications of the decision that will be handed down are a true test of the government structure that our founding fathers conceived to ensure that our republic would withstand the test of time. 

If you are asking yourself what this topic has to do with the flooring business, I will say that 30 years ago it wouldn’t have been as big a deal. But today, with approximately 70% of all hard surface flooring sold in the U.S. being imported, the fact that import taxes can vary by country-or even worse, change on a whim-has a substantial impact. Consider for a minute that not only do suppliers have to distribute samples that match what they plan to ship, but they also have to be able to offer a price. Who they choose to import from, and what the landed cost is, plays a big role in aesthetics, quality and competitive value, and it all takes time to execute. 

So, what is being debated on November 5? The Constitution, as written, assigns tariff authority to Congress, not the president. Since the country’s beginning 250 years ago, tariffs have been treated as taxes-duties and imports-that can only be levied by the people’s representatives. This allocation was deliberate: taxation without representation was the grievance that sparked the Revolution, so that is why it is addressed in Article 1, Section 8 of the Constitution. Tariffs, like all taxes, fall on Americans. The executive branch can influence what becomes law, but it cannot take the law into its own hands. For those readers who want to delve further into what’s being debated and the legal precedents behind it, I offer this document.

Granted, there needs to be a system that balances the trading we do with our allied nations. But at the same time, it needs to be structured so that it works within the parameters of our legal structure. 

MANNINGTON MILLS EXITS RESIDENTIAL CARPET BUSINESS

Right before press time, we learned that Mannington Mills had decided to shutter most of the assets it purchased from Pharr Yarns and depart the residential carpet business that it acquired in early 2020, right at the onset of Covid. Since entering this business, the company lost the use of the Stainmaster brand and wasn’t able to maximize the bundling synergy with its hard surface sales team, which was part of the initial strategy, though dealers that supported the Phenix brand enjoyed having an option beyond the big three carpet mills. 

At its peak, the residential carpet business generated over $200 million in annual revenue for Mannington. 

According to Tom Pendley, CEO of Mannington Mills, “Our hard surface business is growing and remains healthy. We are making this move to improve our shareholder value and focus where the business continues to grow. The residential carpet business, with its continued shift to polyester fiber, continues to lose share to hard surface flooring. We thank our customers who were loyal to the Phenix carpet brand.” n

For comments on this column, email kemp@floorfocus.com.

Related Topics:Starnet, Phenix Flooring, Mannington Mills