Parks Associates Blog

Tuesday, October 07, 2008

CEA's briefing on the Economy and the Impact to the CE Business

Today, the Consumer Electronics Association's chief economist - Shawn DuBravac - gave a presentation titled The Economy in Crisis: How We Got Here, Where Do We Go From Here and What Does it Mean for Consumer Electronics and Your Business.

When he asked the first poll question to the audience - "Have the recent headlines spooked you?" - the results were pretty staggering. I counted 55 votes as "yes," and 8 as "no."

DuBravac spent a good amount of time examining the history of the current crisis, focusing on the rise of subprime and other more risky mortgages, and the current wave of "negative appreciation" in real estate values around the country. A recent article notes that average home prices declined 16% in the last year. We're a bit more fortunate in the Dallas-Ft. Worth area, as home values here have declined 2.5% since July 2007. That decline is second among major markets (Charlotte, NC, has experienced an average home value decline of 1.8%).

CEA anticipates that retail sales for the holiday season are expected to grow in the "low single digits," perhaps in the 1% range. To put this into perspective, the National Retail Federation reported that holiday sales in 2007 were up 3% from 2006. That itself was the weakest growth since 2002, when sales great at 1.3%.

Based on factors such as declining property values and personal investments, CEA calls for "weak" consumer spending over the fourth quarter and into the first quarter of 2009. Their estimates are for a 3-4% decline in consumer spending. However, CEA did state that technology should "outperform" expectations and do okay this holiday season.

CEA provided a sneak peak of holiday CE purchases:

  • Gaming hardware sales are projected to be up 3.5% this holiday season to 17.1M
  • A/V hardware shipments revenue are projected to be up 4.7% this holiday season

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