• by Aaron Baar , October 7, 2008

The Dow may be tumbling and banks (and other companies) may be having trouble getting credit from one another, but the Consumer Electronics Association says the holiday season will not necessarily be bleak for it.

In a preview of its holiday forecast, CEA economist Shawn G. DuBravac said two of the key products in the consumer electronics sector--video game consoles and audio/visual equipment--are expected to increase 3.5% and 4.7%, respectively.

"Despite all other indications that we're in a recession, consumer technology is holding up well," DuBravac said in a Web presentation. "Technology, given the momentum it's had so far this year, should perform better than the overall retail sector."

The CEA estimated that overall retail sales were expected to have only a 1% increase over the holiday season, according to DuBravac. That outlook is bleaker than the one presented by the National Retail Federation last month, which predicted sales growth of 2.2%. Factors for the slowdown, according to the NRF, include: declining housing prices, meager income gains and increasing unemployment rates.

However, other factors--such as an expected slowdown in holiday travel and more cocooning among consumers in general as they weather the economic slowdown--could boost technology sales, according to DuBravac. Other evidence indicates that consumers continue to spend on technology, even as discretionary spending on other products--particularly big-ticket items like cars--declines.

"Perhaps there's a shift away from technology being viewed as purely discretionary spending," DuBravac said.

Meanwhile, retailers are not carrying excess inventory, meaning it's unlikely there will be huge markdowns on items currently in stock, and that they will need to restock quickly as soon as things pick up. And despite banks' current unwillingness to lend money to each other or larger companies, retailers are still able to access credit markets, and are willing to extend credit to consumers, DuBravac said.