InfoComm ’22 Blog: Economic Headwinds and Tailwinds
InfoComm ’22 was a whirlwind – a heady brew of R&D innovation, hugs and #avselfies, supply chain commiserations, provocative panels and moments of revelatory clarity on why live gatherings and in person are our collective beating heart. I could fill pages with everything I’ve seen, learned and felt at InfoComm, but, here, I’m going to focus on how my show experience started. June 7, Sean Wargosenior director of commercial intelligence of AVIXA, and Peter Hansen, an AVIXA economist, informed me of the association’s latest detailed market study. As always, they provided actionable insights, merging macroeconomic projections with well-researched information on key vertical market opportunities and solution areas.
Macro headwinds
Macroeconomically, the news is sub-optimal. According to Hansen, while the United States will likely experience respectable gross domestic product (GDP) growth this year, the outlook has softened in Q1/22 and Q2/22. Although Hansen puts the odds of a recession at slightly below 50%, he says they are higher now than at any time in the past decade. This is due, in part, to inflation that we haven’t seen since the early 1980s. Along the same lines, this is due to aggressive interest rate hikes by the Federal Reserve in an attempt to to control inflation. Higher interest rates mean that borrowing will soon cost more. This tends to discourage the kinds of investments companies make when money is cheap. Higher interest rates have the corresponding effect of depressing demand. (Overabundant demand, as we’ve had for the past 12+ months, is driving prices up.)
Excessive demand is also, according to Hansen, at the root of the current supply chain problems. He notes that 2022 has unfortunately marked a new peak in supply shortages, and he points directly to growing demand that far exceeds product availability. While this mismatch between supply and demand may now ease, Hansen warns that supply shortages could persist in some regions into 2023 and into 2024, albeit on a reduced basis. According to him, the best possible outcome would be an economy that continues to grow rapidly, but not at the breakneck pace we have seen after the historic pandemic-era stimulus investments. This would slow demand enough to allow supply to catch up.
Industry specific tailwinds
For the commercial AV industry, AVIXA research forecasts a compound annual growth rate (CAGR) of 5.9% between 2022 and 2027. Perhaps more auspiciously, Wargo and Hansen expect revenue from 2022 exceed those of 2019; thus, they expect this year to mark a new high. Asked about the biggest growth areas, Wargo points to live events (eg concerts, shows) as well as performance and entertainment (ie stationary applications). That’s no surprise, given that most of us are eager to put pandemic-era lifestyle modifications behind us. Wargo also highlights ripe opportunities in the enterprise segment, especially as businesses reinvent the modern workplace. As always, technology makes it easier to adapt, helping employers avoid the dichotomies between in-person and remote people. In Wargo’s mind, the venture represents the best opportunity to harness the power of the hybrid.
Despite the macroeconomic headwinds, tech professionals need to be optimistic. Managed services revenues continue to grow, paving the way for more sustainable business models. And we are seeing the rise of the experience economy, especially experiential leisure. This invites integrators to design and deliver the kinds of indelible experiences that only AV professionals can deliver. Should we be realistic about headwinds? Yes. But we shouldn’t be blind to tailwinds.
I learned a lot at InfoComm. I also laughed a lot and left with memories that I will always keep with me. It was experiential; it was immersive. And it has instilled confidence in me that our industry — and, more importantly, its people — is ready to weather passing storms and emerge stronger and better.
For other articles by Dan Ferrisi, see his Commercial Integrator the author’s page.
