What the Fiscal Cliff Hath Wrought
Actually, the words “fiscal cliff” don’t appear in the January 2013 version of the InfoComm International Economic Snapshot Survey that I previewed recently. But it’s hard to look at the survey results and not conjure up the months of hand-wringing, news reports, political rhetoric, uncertainty, gloom and doom, you name it that ended in a last-second deal in our nation’s capital (plus a healthy portion of kick-the-can-down-the-road).
To get right to the point–and perhaps to no one’s surprise–the most recent Economic Snapshot, based on a survey fielded in November 2012, indicates that business around that time may have been more sluggish than usual (the final report will be out soon, so check back for a link or visit InfoComm’s research web page). And the AV industry’s confidence in the business climate was a little shaky, tainted–it would appear–by fear, uncertainty and doubt.
The result was an InfoComm Performance Index (IPI) that, while still indicating ”good” business conditions, was the lowest recorded since October 2010.
Now, let’s put that in context a bit. It would appear that customers were extra-careful with their money late last year as the federal government fiddled around with its finances, no doubt nervous that going over the fiscal cliff might spell economic hardship. In fact, the InfoComm Demand Index (IDI), which gauges whether end users say they’re in the market for AV systems, dropped about 8 percent from where it was in the previous Snapshot, which came out last fall. (More context: When that Snapshot came out, the IDI had just jumped 10 percent from the spring 2012 survey, so demand is still finding its footing.) Corporations, especially, reported a drop in demand, but looking ahead, it’s those same corporate users who expect demand to bounce back the most.
The latest IPI is nothing like the abysmal numbers we saw when the economy really was in turmoil, back in 2009. Back then, AV companies reported an IPI of 57.1 for what was basically the first six months of that year. Now, looking back at the months leading up to the presidential election and the fiscal cliff negotiations, the IPI was 65.7. Check out the chart below.
“Presidential election,” you say? Maybe uncertainty over who would lead the country contributed to the lackluster IPI and IDI? Interesting question, one that researchers who conducted the survey address in the new Snapshot. While they concluded that economic uncertainty over the elections clouded respondents outlook for the October 2012 study, the actual results appeared to have no impact at all. They surmised this because the latest survey was in the field both before and after President Obama’s victor over Mitt Romney. And the IPI from AV companies before the election was nearly identical to the IPI after the election.
What you’re left with is simple economic unease. And it’s a bit at odds with what AV companies expect in 2013. Despite a lower forward-looking IPI than in studies past, the latest Snapshot indicated AV firms are actually pretty optimistic when you ask them about the markets they know best, namely their primary business segments. Ask them about the outlook in their specialties, whether it’s corporations, education, or HOW, and most see greater demand for their services in 2013.
Researchers who worked on the Snapshot dubbed this paradox “default pessimism.” Ask AV pros about the industry as a whole and they’re less certain. Ask them what they think about the markets they specialize in and they’re more optimistic. Seems very reasonable.
In short, 2012 was an uncertain year leading up to elections and the fiscal cliff, not to mention the ongoing story of economic hardship in Europe. A declining IPI over the last two surveys seems only logical. While it’s tempting to ring alarm bells, it seems likely the AV industry has been buffeted by the same current events as the overall business market.
So, although we will always live in an uncertain world, we’re about to enjoy a little more certainty than we’ve had recently. Perhaps the rubber meets the road in the next Economic Snapshot. When that survey hits the field, I encourage you to take some time and participate. In the interest of full disclosure, while statistically sound, according to the experts who help InfoComm tabulate and interpret the results, this latest Snapshot garnered far fewer responses than other recent studies (which had been setting response records until now). When you get a notice of the next survey, follow the link.
In the meantime, as always, let me know what you think of the business climate in the Comments section. Any indication that customers are loosening their purse strings? Any worries on the horizon? Gearing up for a gangbuster year?
A belated Happy New Year to you and yours. Good luck in 2013.