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CEA: Glimmer in the Gloom?

10/10/2008 6:27 AM

Amid global economic meltdown, the Consumer Electronics Association sees reasons for cautious optimism.

CEA economist Shawn DuBravac, in a webcast earlier this week, predicted spending on consumer technologies would "outperform" the broader retail sector in the 2008 holiday season.

Things are, to be sure, bad. The CEA is forecasting a $400 billion drop in U.S. consumer spending for the year, a 4% decline out of $10 trillion in total spending. DuBravac said employment figures are "coming down in a recession-like manner."

But as retail sales continue to trend down — with weak spending into the early part of 2009 — consumer electronics are garnering a larger share of discretionary purchases, according to DuBravac.

"Consumers, when they’re looking at their total spend, are reallocating some of that money that they might have spent on autos or on appliances, other things like that, and moving it towards technology," he said. 

"Technology has held up OK despite the economy," he added, singling out solid sales this year for flat-panel displays.

For the holiday season, CEA is forecasting above-average performance for two categories: audio-visual equipment (including TVs) and videogame consoles. 

According to the association’s current forecasts, A/V hardware shipments are expected to be up 4.7% for the holiday season compared with last year. U.S. gaming hardware units will be up 3.5% this holiday season, to 17.1 million units.

"I certainly don’t want to appear myopic at all, but these seem to be reasonable projections," DuBravac said.

Another encouraging sign: He noted that there hasn’t been "a rush to consumer credit as we have seen in previous downturns."

Things may look good now. But we have yet to see what the actual pullback in consumer spending will be from the economic turmoil, and how hard it will hit the consumer-electronics industry (or, for that matter, multichannel video providers). Is Joe Six-Pack going to drop a grand for an HDTV — or pay his winter heating bills?

 

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