InfoComm ’22 Blog: Economic Headwinds and Tailwinds
InfoComm ’22 was a whirlwind — an intoxicating brew of R&D innovation, hugs and #avselfies, supply-chain commiserations, provocative panels and moments of revelatory clarity about why live, in-person gatherings are our collective beating heart. I could fill pages with everything I saw, learned and felt at InfoComm, but, here, I’ll focus on how my show experience started. On June 7, Sean Wargo, AVIXA’s senior director of market intelligence, and Peter Hansen, AVIXA’s economist, briefed me on the association’s latest detailed market research. As always, they offered actionable information, fusing macroeconomic projections with well-sourced insights into key vertical-market and solution-area opportunities.
Macroeconomically, the news is suboptimal. According to Hansen, although the U.S. will probably experience respectable gross domestic product (GDP) growth this year, the outlook has softened through Q1/22 and Q2/22. Although Hansen puts recession odds slightly under 50%, he says they’re higher now than at any point in the last decade. This is due, in part, to inflation we’ve not seen since the early ’80s. Relatedly, it’s due to the Federal Reserve’s aggressive interest-rate hikes to try to tame inflation. Higher interest rates mean borrowing will soon cost more. That tends to disincentivize the kinds of investments firms make when money is cheap. Higher interest rates have the corresponding effect of depressing demand. (Overabundant demand, as we’ve had over the last 12-plus months, pushes prices higher.)
Excessive demand is also, according to Hansen, the root of current supply-chain snarls. He notes that 2022 has sadly marked a new peak in supply shortages, and he points directly to spiking demand far outstripping product availability. Although this supply/demand mismatch might now be abating, Hansen cautions that supply shortages might persist in some areas through 2023 and into 2024, albeit in a scaled-down way. The best possible outcome, he argues, would be an economy continuing to grow quickly but not at the blistering pace we saw after the historic, pandemic-era stimulus investments. That would decelerate demand enough to allow supply to catch up.
For the commercial AV industry, AVIXA research forecasts a 5.9% compound annual growth rate (CAGR) between 2022 and 2027. Perhaps most auspiciously, Wargo and Hansen expect 2022 revenues to exceed those from 2019; thus, they expect this year to mark a new high. Asked about the biggest growth areas, Wargo points to live events (e.g., concerts, shows) as well as performance and entertainment (i.e., fixed applications). This isn’t surprising, given that most of us are eager to put pandemic-era lifestyle modifications behind us. Wargo also highlights ripe opportunities in the corporate segment, particularly as companies reimagine the modern workplace. As always, technology facilitates adaptation, helping employers avoid either/or dichotomies regarding in-person versus remote. In Wargo’s mind, corporate represents the best opportunity to harness the power of hybrid.
Macroeconomic headwinds notwithstanding, technology professionals should be optimistic. Managed-services revenues continue to increase, lighting a path to more sustainable business models. And we’re witnessing the rise of the experience economy — in particular, experiential leisure. This invites integrators to conceive and deliver the kinds of indelible experiences that only AV professionals can. Should we be realistic about the headwinds? Yes. But we shouldn’t be blind to the tailwinds.
I learned a lot at InfoComm. I also laughed a lot and left with memories I’ll carry with me always. It was experiential; it was immersive. And it infused me with confidence that our industry — and, more importantly, its people — stands ready to weather transitory storms and emerge stronger and better.
For other articles from Dan Ferrisi, check out his Commercial Integrator author’s page.