Survey: Big decline seen in US consumer tech spending

With an American economy that is becoming increasingly unstable, thanks largely to the credit crunch and the return of inflation, consumers appear to be closing their purse strings tightly when it comes to tech purchases.

Only 19% of 4,427 consumers polled late last month say they will spend more on tech gadgets in the next 90 days, versus 33% who will spend less, according to a study released Tuesday by ChangeWave Research of US consumers. While the number of consumers saying they would not spent as much has remained rather constant, those spending more has not.

During November, nearly four out of every ten consumers said they would spend more, but this had dropped to 27% by January. With increasing consumer unease, it appears as if conditions for the CE market are bound to only get worse.

"These results clearly show that the consumer electronics sector is getting whacked," ChangeWave researcher and author of the report Tobin Smith said.

The hardest hit retailers were Best Buy and Circuit City, down six points and three points respectively. However budget retailers seem to be benefiting from a worsening economy, with their market shares remaining stable.

Items that are expected to see the biggest decreases in sales include LCD TVs, digital cameras, cell phones, and iPods.

CE retailers shouldn't expect consumers' tax rebate checks coming this spring to help their situation very much. Only seven percent expected to spend it on consumer electronics, with nearly a third expecting to use it to pay down debt.

"There is frightfully little in our findings to suggest the federal stimulus plan will jumpstart consumer spending on electronics and popular gadgets," Smith explained. "Rather, our findings point to an increasingly preoccupied American consumer who has fallen out of love with gadgets -- at least temporarily."

ChangeWave's data is also backed up by the commonly used Consumer Confidence index, which fell to 75 in February (par being 100), its lowest level in fifteen years -- save for the period surrounding the beginning of the 2003 Iraq War. Expectations are similarly low, and were at seventeen-year lows according to the Conference Board, which produces the report.