The AV Business Is Cautiously Optimistic About The Economy In 2010

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The descent of this current recession was as steep and bumpy as a plane crash, yet the pending recovery isn't showing the historical signs of a quick bounce back. Fed Chairman Ben Bernanke rightfully blames the banks who gladly took TARP money, yet wouldn't lend to AV consumers or specialty consumer electronics companies without the kind of collateral that would make it such that either party wouldn't need a loan in the first place.

Amazingly, the audio-video business isn't feeling as gloomy about the future as it once did. Yes, there are easily two dozen skilled "rainmaker" national sales mangers who can't find work. Yes, Nortek went into bankruptcy. Yes, countless highly respected AV companies took all of 2009 (and much of 2008) off from marketing or creating consumer demand. All of this is true, but the tides, as Jimi Hendrix said on Electric Ladyland, are "gently turning" and this time it's for the better.

I saw a chart on CNN this week showing the reach-for-the-sharpest-knife-you-own-and-slice-up-and-down report on lost jobs since late 2008 to November of 2009. Each month had a net loss of jobs, which is not good news. The potential ray of sunshine is the fact that while nearly 800,000 jobs were shed in January 2009, only 11,000 jobs were lost in November 2009. It's not unreasonable to think that by January 2010 the American economy could actually start creating jobs. Obama and the Democrats have their political futures bet on it, and if they are right, employed people are more likely to buy AV equipment.

The housing market is showing signs of bottoming out. Much like the job market, this isn't a boom back to the days of 2006 values; however the free fall that we have seen in the past few years may have hit rock bottom or is close to it on the residential side of real estate. An $8,000 tax credit is a strong incentive for many new home buyers. Assuming you can get a loan from a bank today, the rates are at 40 year lows. Property taxes are lower and here in California you get your rates locked in until someone (Yes, Mr. Arnold I am talking about you) has the balls to repeal Prop 13. New, young home buyers are the most likely people to need HDTVs, electronics, home theater, speakers, modest home automation and beyond. If the numbers solidify and people start to believe that the worst days of this horrific recession are behind us, more and more people will make real estate investments, especially if Tim Geithner and President Obama can threaten the banks we now own into lending money again.

The pending 2010 Consumer Electronics Show isn't likely to have the same boom time feel that it did a few years back (post COMDEX merger), most notably because the decision to attend the show would have been made by companies and dealers at the darkest moments of the recession. H1N1 flu doesn't help lure people to Las Vegas either, nor are dealers gung ho about trucking their sales staff out of town when most dealers are struggling to keep their doors open. With that said, the companies that go to CES as well as the ones that sit this show out are starting to talk about better days ahead. They are making cautious decisions about marketing, new products and even hiring that if kept up will build a meaningful trend. While boom times might be years away for this economy, it looks like there could be some better days ahead for the specialty AV and consumer electronics market staring in 2010.


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