In the interior design industry, it’s a beautiful, sunny afternoon. Projects have been plentiful. Firms are still hiring like crazy. Fabric houses and furniture-makers alike have been enjoying their best months ever. Everyone you follow on Instagram just spent the past week in Milan, going to crowded parties, drinking Aperol Spritzes and taking pictures of an enormous—and likely very expensive—Daniel Arsham installation that resembled an artsy minimalist cave.

In the world of high finance, the weather is different. The global economy is wobbly. Inflation is out of control, and the Fed is responding by raising interest rates, cutting off the flow of cheap money that has fueled so much of the decade-long bull market. As a result, mortgage rates are up—way up. Equities are down. Crypto? Sinking like a stone. On Tuesday, the stock market took a significant tumble, with the S&P officially slipping into bear market territory.

If The Wall Street Journal is your morning read, it’s a gloomy, drizzling morning, with more storm clouds on the horizon. At some point, will the rain begin to fall on the design industry’s parade?

If you want to know how much a barrel of oil costs, it’s a quick Google. The spot price of a shipping container from China to the East Coast? Easy: $11,908. From the value of wheat to the amount consumers spend on used cars, big chunks of the economy are tracked, charted and systemized—they’re known. Interior design is not one of them. There is no market index that aggregates design projects and no financial instrument pegged to the price of ivory boucle.

Measuring the design industry’s health also presents a structural challenge, in that most firms don’t cater to more than a dozen or so clients at a time, and most vendors don’t cater to more than a few hundred—maybe a few thousand—designers. As a result, everyone is seeing the bigger picture through a tiny porthole. Even in the worst economy, any one design firm might have its best year ever.

Still, it’s worth asking what people are seeing through their portholes. An informal survey of a handful of designers in New York, Los Angeles and Texas suggested that the good times are still rolling—and that the undulations of the stock market in general did not play a part in how their clients approached spending on their homes.

“My clients seem to have nerves of steel—they’re really well resourced,” says California designer Rachel Moriarty, echoing a common sentiment. “When things take a downturn, I see them looking for opportunities, not panicking at all. They’ve never let their foot off the gas.”

Despite warning signs in the economy, many designers and design world brands are still riding the waves of the home boom—with a few possible explanations.

The first may simply be a time lag. Many firms are still struggling to keep up with the backlog of projects that accumulated during the pandemic boom, and more than a few are booked well into next year. When you ask designers how their business is faring today, you’re really getting a snapshot of the market nine months ago—in this case, late 2021, still in the thick of the boom, with a roaring stock market in the background. It’s possible that things will feel very different by the end of the year.

Of course, they may not. Housing starts, long seen as a reliable bellwether for the health of the furniture industry, are slightly off their highs, but still above pre-pandemic levels. And while the stock market is tanking, the stock market isn’t quite the same as the real economy—consumer spending remains high and unemployment is low. It’s hard to know what to make of a confusing mishmash of macroeconomic signals that all seem to point in different directions.

“We’re in such a strange time now, I’m not sure past experience means anything,” says Jim Druckman, the president and CEO of the New York Design Center. “Here we are with full employment, our industry is booming, yet we do have high inflation and a stock market that’s running scared. This is a time and place we’ve never seen before, but I don’t hear ‘Woe is me’ from any tenants, and we’re at full capacity in the building, with people looking for more space.”

Finally, there’s the simple fact that interior design is a service for the affluent. And while the stock market may be in a slump at the moment, the well-off still have money to spend. That’s especially true at the end of a period that has seen the rich—who could largely work from home during the thick of the pandemic, and who benefited from the two-year bull market—get richer.

New York–based designer Jamie Drake says that, while undulations in the stock market have historically made clients cautious, he’s seeing no signs of it at the moment, with significant new inflows of work and current clients looking to go full steam ahead on major projects, even in the face of significant increases in costs wrought by the pandemic. “Things are different this time around,” he says. “The amount of money people have accumulated has been extraordinary, and those at the top aren’t going to stop.”

The affluent will always enjoy some insulation from the vagaries of the market. But you only have to look back to how the business reacted following the Great Recession to see that sometimes, the broader economy does matter.

The post-2008 era is full of dire statistics and bankruptcy stories, but, to pick a number out of the hat: 779, or, the amount of doors that the now-famous designer Corey Damen Jenkins had to knock on to get his first client after starting a firm in the thick of the recession. Now, the idea that a talented designer would have to pound the pavement to get work almost sounds like a joke—the market has been so hot over the past two years that 25-year-old design assistants are leaving established firms to strike out on their own. But at the time, it was punishingly difficult to get a design business off the ground.

Even established designers have experienced setbacks brought on by market wobbles. After the Black Monday crash of 1987, Drake had a short lean period, and then post-2008, a more difficult stretch that led him to scale back his team. “Business definitely took a hit, and I had to make cuts. I did four, then a few months later unfortunately another four—I was very well advised to do them all at once,” he says. “As the captain of the ship, I took it as my responsibility, although logically it was beyond my control.”

If there is a pullback in the months ahead, it likely won’t resemble 2008’s historically dire economic collapse. But even if the wealthy basically stay wealthy, the psychological effect of $7 gasoline, rampant inflation and a plummeting stock market will give some clients second thoughts about going big on a new project—a reversal of the so-called “wealth effect,” the phenomenon of consumers spending more when their stock portfolios go up, even if their actual income hasn’t changed. In off-the-record conversations, leaders of design industry brands will say they are, at the very least, monitoring the potential of a slowdown closely.

What private business owners will whisper, leaders of publicly owned companies say out loud. It’s no secret the retail sector of the home business has been receding from its home boom bonanza, as stimulus money dries up, inventory levels pile up, prices stay high and consumers shift their spending away from the home. Most home retailers’ stock—Wayfair in particular—have fallen far off their pandemic highs, and companies like Arhaus, which went public in November of last year, never even got a pop in the first place.

Even RH chairman and CEO Gary Friedman—long a reliably optimistic voice—expressed caution in his most recent quarterly earnings call after issuing guidance that the company’s revenue would likely stay flat in the second half of 2022. “Luxury hotels are going to do really well. Luxury apparel is going to do really well. Luxury home is a completely different industry,” he told investors. “I’m surprised at how many people think, ‘Well, gosh, Hermès and Louis Vuitton and Kering have really good numbers right now. Why are you soft?’ Sometimes, I just want to hang up the phone. That’s a bad question. … The data that's in the market is really clear: It’s not really good for our industry right now.”

Elsewhere, high-end real estate is slowing down as well. In a wide-ranging article looking at the tip-top of the market, The Wall Street Journal quoted realtors across the country who described prices retreating from recent highs and inventory levels creeping back up. A recent Redfin study concluded that the number of luxury homes sold in February, March and April of this year had dropped almost 20 percent compared to 2021.

New homeowners who rely on mortgages are also moving in with less money to spend. As the Federal Reserve hikes up interest rates to combat inflation, mortgages get more expensive—by some estimates, even the seemingly small jump from 3 to 5 percent interest on a 30-year fixed-rate mortgage can add more than $100,000 to the lifetime cost of homeownership.

Dalia Bose Tole, a New Jersey–based broker for Compass, says that in recent months, new homeowners and would-be flippers alike have been either abandoning or downgrading planned renovations, a phenomenon most easily observable in their choice of appliance brands. “It’s more expensive to move into a home,” she says. “During the heyday, people were going for a 48-inch Wolf Sub-Zero range, which is $10,000 at the entry level. Now, they’re looking at all the costs and going, ‘You know, Bosch really isn’t so bad.’”

If we are headed for a recession, for many in the design industry, it will be a first. Though 2008 doesn’t seem like ancient history, a lot has changed over the past 14 years. Instagram, founded in 2010, has never existed during a sustained downturn for the design business. Neither has Pinterest. The last time we were going through a recessionary period, RH was still called Restoration Hardware, and it sold novelty tchotchkes. The point being: Much of the industry as we know it today—including its big stars and standout brands—is a product of a sustained boom period.

What would a pullback in the design business look like? It’s complicated. Even during “down” periods, people still need furniture, and crafting a beautiful home is a deeper need than buying a cool car or status handbag. Designers and industry experts say that many clients can still think long-term even if money is tighter than usual. But they caution that in a recession, projects do get put off—some indefinitely—and budgets are scaled back. The ultrawealthy will keep spending money, but the tier of consumers below—the executives and professionals who rely on stock windfalls and year-end bonuses to fund big purchases—may pull back.

“What really hurt [in the 2008 recession] is those designers who serve people who want to spend a few hundred thousand dollars to make their home a little nicer. That business does get crushed,” says business coach Sean Low. “Those clients worry about their job, or they’re thinking, ‘What is my bonus going to be this year?’”

Low, who helped several design firms weather the 2008 recession, says that surviving a downturn is a matter of being adaptable while sticking to core principles. For example, if you’re concerned that a wobbling stock market may test clients’ resolve as purchasing begins, structure your pricing to emphasize design fees. The one thing you absolutely shouldn’t do, he says, is lower your rates.

“Never lower your fees on an absolute basis. Not ever. That’s the kiss of death, and you’ll never recover,” says Low. “In a market downturn, people make short-term decisions, but creating a home is a long-term problem. If you’re just reacting to the market, what are you really offering? You want to position yourself as someone who offers long-term solutions.”

Candid conversations with clients are also probably a good idea. New York designer Becky Shea is booked up with work that will take her firm through 2023 but has been checking in with clients to re-confirm their commitment to projects that may stretch on through a downturn. “We raised questions [about a potential recession] in February,” she says. “We work with really smart homeowners who are open to these conversations, and I’m very grateful for that.”

Of course, no one—from Gary Friedman to Federal Reserve chairman Jerome Powell, has a crystal ball. We may not have a significant economic downturn after all. Or we may, and the design industry may not really feel the effects. After two years of bonanza, even a flat period would still keep the business at historic highs.

But if the industry does hit a slump, veteran designers say it’s important to keep calm and carry on. Design is not immune from the broader economy, but working for the affluent is a buffer, and the need for a thoughtful, well-designed home—unlike, say, the desire for an NFT—isn’t going away. Though they’re no fun, downturns are often clarifying periods for a business. Lessons are learned, and bad habits are eliminated. Many look back on recessions as necessary trials from which they emerged better.

“[Downturns in] 1987 and 2008 taught me about cycles,” says Drake. “Both made me a stronger, calmer leader.”

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