Big Picture: Market Jitters and Mid-Term Economic Risk
A number of factors hit at the end of February that rattled global stock markets in general and the U.S. stock market in particular. This unsteadiness ebbed a bit but continued into the first week of March and can be expected to continue in some form throughout the first quarter.
Despite the turmoil, the economic outlook is anything but pessimistic, with overall economic trends lightly impacting CE spending. The CE segment as a whole has been fortunate to escape consumer spending issues affecting other segments of the U.S. economy. The looming question is whether tech and CE markets can continue to grow despite negative economic data.
Conventional wisdom held that these market segments were traditionally dependant on overall economic performance, but emerging data is beginning to suggest otherwise. Consumers have displayed an amazing resilience that is starting to upend conventional wisdom. Penetration of consumer electronics into all areas of the home—from refrigerators to laptops to televisions to home security systems—is so pervasive that growth could continue even in the face of a slowdown. This would be welcome news, forcing analysts to reevaluate the industry. That said, the CE industry would be vulnerable if the U.S. economy suffers severe difficulties. But that does not appear likely anytime soon, even in light of February’s stock market dive.