Electronics Production to Accelerate in 2015
Expect consumer electronics spending to grow for the rest of the year. Processors of electronics products should see growth in the second quarter of 2015.
Consumer electronics spending and electronics production in the U.S. have grown exponentially since the early 1970s. In fact, spending on electronics has gone from 0.03% of disposable income in 1974 to 2.88% of disposable income today.
While consumer electronics spending essentially never contracts on an annual basis, electronics production has contracted on an annual basis three times in the last 40 years.
However, it takes a very significant recession for this to happen. With these brief contractions as the exception, electronics production in the U.S. has also grown exponentially. Over the last decade, electronics production in the U.S. has increased nearly 150%. So while many Americans believe electronics are no longer made in this country, the data says otherwise.
The leading indicators for electronics spending are the 10-year U.S. Treasury bond rate and real disposable income. Both of these indicators are pointing toward faster growth in consumer electronics spending. The real 10-year Treasury rate (that is, adjusted for inflation) has increased at a slower rate since July 2013, making it easier for consumers to use debt to finance increased spending. Also, real disposable income has been growing annually at an accelerating rate every month in 2014.
I use three leading indicators—housing permits, consumer electronics spending, and new orders of computers and electronics—to forecast electronics production. While housing permits have seen decelerating growth since the end of 2012, the slower growth in interest rates suggests that housing permits should start growing faster again very soon. Housing permits tend to lead industrial production by 10 months. Therefore, based on the change in housing permits, electronics production should start growing around the end of the second quarter of 2015.
Consumer spending tends to lead production by nine months. Again, this would point to electronics production seeing accelerating growth in the second quarter of 2015.
Finally, manufacturing new orders tend to lead industrial production by just three months. But, the trend in computers/electronics new orders has pointing toward faster growth in electronics production for about a year. Therefore, all three leading indicators are pointing toward faster growth in electronics production in 2015.
Related Content
-
Foam-Core Multilayer Blow Molding: How It’s Done
Learn here how to take advantage of new lightweighting and recycle utilization opportunities in consumer packaging, thanks to a collaboration of leaders in microcellular foaming and multilayer head design.
-
‘Monomaterial’ Trend in Packaging and Beyond Will Only Thrive
In terms of sustainability measures, monomaterial structures are already making good headway and will evolve even further.
-
PHA Compound Molded into “World’s First” Biodegradable Bottle Closures
Beyond Plastic and partners have created a certified biodegradable PHA compound that can be injection molded into 38-mm closures in a sub 6-second cycle from a multicavity hot runner tool.