The Bureau of Economic Analysis stated this week that consumer spending, which was anemic for the past two quarters, sharply declined in the third quarter. The catalog of woes include plummeting car sales, lines of credits are being cut, airline traffic is dropping, restaurant chains are struggling to fill tables, and there sparse shoppers in stores. What’s more, some economists now believe the cutbacks are so severe that the overall economy did not expand either, and they warn that a consumer-led recession could be severe.
The specifics of the current crisis could have a nasty fall out for custom installers. The freeze on the current commercial paper market has made credit lines difficult to access, short term loans are either very expensive or impossible for small businesses, cash flow is therefore affected, as is payroll. Less orders will go in for inventory or parts. More and more layoffs are also predicted. When the US federal reserve does step in with some sort of antidote and confidence is restored, the economy is expected to return to life, very slowly, by degrees.
The financial storms did not seem to shake CEDIA attendees but no one was optimistic, either. Despite the economic calamity on Wall Street, EXPO reported a minor drop in attendance from last year’s event—25,000 visitors compared to 29,000 in 2007. There were 500 exhibitors on hand last month, including 90 new companies, demonstrating their technologies for the home including next-gen HD displays, touch screen innovations, and wireless whole-home distribution systems. The verdict? CI business in the US market is neither buoyant nor depressed, but holding steady during the current market freefall. To offset the impact of the economy and in anticipation of higher travel costs for members, CEDIA provided over $500,000 worth of free education. The message is to invest in education and professional training, not abandon it, during uncertain business times.
CEDIA’s clientele is higher end, deluxe projects will still continue even as Main Street suffers. Consumers are price-shopping to get the best deal, but as CEDIA keynotes emphasized, installers must get creative and innovative to keep sales steady. The “nesting” scenario (vacationing at home) is proving to be a promising development for custom installers and home theater specialists. Americans are going out less because of fuel prices – but this could lead to a boost in home entertainment. What better way to refresh an old room or jazz up the living room than new speakers or a chic plasma, now more affordable than ever?