Metalworking Forecasting Tools

Computers & Electronics

Since Americans are better at spending than saving, it makes sense that the real personal income excluding government transfers (think social security, welfare, unemployment benefits, etc.) is a leading indicator of spending on electronics. It's important to note that consumer spending on electronics has been growing for 40 years, even when earnings are contracting. On average, changes in real average hourly earnings leads real video, audio, and computer goods spending by 10 months.

It makes sense that consumer spending on video, audio, and computer goods is linked to industrial production of computer and electronic products. The chart below shows that there is a very good correlation between what consumers spend and what manufacturers produce. On average changes in electronics spending leads changes in industrial production of computer and electronic products by 10 months.

Industrial production of durable goods leads machine tool unit sales. For the computer and electronics industry, it appears that this is the case most of the time. Although, it would be helpful to have more historical data to draw a definitive conclusion.