Why 2013 Looks Promising
The amount of GDP spent on ‘residential investment,’ which means everything from new housing to remodeling, was up 15 percent from 2011.
The political pundits say that one of the reasons President Obama won last year’s election was highly effective data analysis. His re-election team was astutely able to target voting blocs by race, gender, income and geography. The election outcome proves that it works.
So when we look at the massive amounts of data pouring in about the economic outlook for 2013, we are able to make some educated predictions. Overall, it looks like the year has the potential to be relatively strong for integrators, especially when compared to previous years. Here are the reasons we are optimistic.
Solid 2012 Revenues: According to our annual State of the Industry report, in 2012 a typical integration company’s revenue rose by a median of 5 percent. It’s nothing to throw a party about, but it’s an increase over the previous year nonetheless.
Double-digit Growth Predictions: CE pros always tend to be an optimistic bunch. Even in the midst of the Great Recession, more than half of integrators predicted revenue growth year over year. But for 2013, dealers are almost universally excited. First, more than nine out of every 10 dealers believe this year will be either up or flat. Second, they predict a substantial 12.6 percent jump in revenues this year.
Residential Investment GDP: This might seem like an oddball piece of data, but it has been very accurate as a leading indicator for integrators. According to the government, the amount of Gross Domestic Product (GDP) spent on “residential investment,” which means everything from new housing to remodeling, was up 15 percent through the first three quarters of 2012 vs. 2011. (Q4 data was unavailable at press time.) This is important because that figure actually started dropping two years before the Great Recession hit. It foretold the residential crisis two years in advance. After a virtually flat 2011 (-1.3 percent), it’s up in 2013 (to 13.7 percent). If this continues to be a good leading indicator, it means this year, and certainly next year, will be strong ones for residential spending.
Housing Starts Up: Though not yet the year-end numbers, the Department of Commerce (DOC) is showing that new home construction was trending upward an incredible 42 percent in 2012 vs. 2011. (894,000 starts vs. 630,000). Even though CE pros have diversified to target existing homeowners over the past five years, a busy new home construction market is sweet music to their ears. Predictions from several sources, including the Consumer Electronics Association and the UCLA Anderson School of Management, are for 1.1 million starts in 2013 (and 1.4 million starts in 2014).
Housing Equity/Remodeling Up: To sustain remodeling, homeowners have to be confident that their home values will increase. Data from the DOC shows home equities rose 3 percent in 2013. That doesn’t sound like a lot, but it is amazingly positive given recent years. Meanwhile, actual remodeling spending is predicted to be up 16 percent by Q2 of 2013, according to the reliable Harvard Joint Center for Housing Studies gauge.
All of this data points to one thing: Integrators will be busier this year with work coming in from builders, consumers, interior designers and architects. It’s time to run growing businesses again. Good luck.
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California. Have a suggestion or a topic you want to read more about? Email Jason at [email protected]
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