Economic Landslide Could Drag Down Tech

A new NPD survey shows that consumers pessimistic about the U.S. economy will scale back their entertainment spending.

When it’s time to trim budgetary fat, hardcore geeks may be ready to switch to ramen and boiled potatoes before giving up their gadgets, but a new survey from the NPD Group shows that consumers in general will cut back on entertainment spending if the economy heads south. The results of the survey, announced on Tuesday, show that 37 percent of Americans anticipate spending less on entertainment in 2008 than in 2007.

Those who said they would lessen spending cited concerns about the increasing cost of other goods like fuel and food, along with a blanket belief that the U.S. economy was worsening, which spanned almost all groups.

“Entertainment has historically been a reasonably recession-proof spending category,” said Russ Crupnick, entertainment industry analyst for NPD, in a statement. “But in the 2001 recession there were a spate of new gaming platforms, DVD was a relatively new format, and music CDs hadn’t yet suffered the full onslaught of digital downloading. It appears from our recent consumer surveys that the current economic climate might be more challenging for those who make and sell entertainment products.”

Among the 18 percent of respondents who said they would spend more, teenagers were a major factor, with 30 percent of that age group getting ready to open their wallets wider this year. Among the spending optimists, most favored purchasing new devices (like Blu-ray players) over new content (like CDs), meaning content producers may have the toughest year of all ahead of them.