U.S. Consumer Tech Spending Projected to Grow Slightly in 2024, Reaching 4.4% Growth in 2025 | CTA

The Consumer Technology Association (CTA) forecasts a 1% increase in overall retail revenues for the U.S. consumer technology industry in 2024, reaching $505 billion. This growth follows two consecutive years of decline in U.S. hardware revenues, attributed to high inflation, sluggish economic growth, and pandemic-related supply chain disruptions. Notably, growth is projected to accelerate to 4.4% in 2025, totaling $527 billion.

This revised prediction, down from an earlier 2.8% estimate, highlights the industry's recovery trajectory. Rick Kowalski, senior director of business intelligence at the CTA, explained in an interview that the forecast is reevaluated biannually. He emphasized that services will support sales in 2024, paving the way for a rebound in hardware sales in 2025.

Kowalski stated, “The industry is experiencing growth again after two years of declines. We anticipate a strong 4.4% increase in 2025.”

Contributing to this recovery, inflation rates are expected to decrease to 3% in 2024, down from 3.4% in 2023. This decline provides consumers with greater purchasing power after facing 6.5% inflation in 2022 and 7% in 2021.

The 2025 cycle marks the onset of a significant replacement phase for technology, as devices purchased during the pandemic approach the end of their lifecycle. Kowalski noted that tech products are becoming more affordable as their features expand. In 2023, over 750 million connected consumer tech devices were projected to ship to the U.S. market.

Kowalski remarked, “Technology is inherently deflationary.” The price reductions in items like TVs, wireless earbuds, and gaming hardware reflect ongoing technological advancements that foster cost efficiencies. He anticipates innovations in artificial intelligence will further drive growth in consumer and enterprise tech sectors, fulfilling evolving consumer needs.

Historically, Moore’s Law postulates that the number of components on a chip doubles approximately every two years. This miniaturization leads to smaller, faster, and cheaper chips, contributing to deflationary trends in technology pricing.

Although inflation in the U.S. hovered around 3.4% in 2023, many tech products saw price reductions. For example, 4K Ultra HDTVs dropped 12% in price, while smart doorbells, wireless earbuds, and home game consoles fell by 6%, 5%, and 5%, respectively.

Kowalski highlighted, “Price declines on hardware are typical in our industry,” complicating growth efforts. Consumer spending on software and services constitutes 33% of total consumer technology expenditure. Six of the twelve major hardware categories are predicted to experience unit growth in 2024, including computing (+3.6%), digital health devices (+1.2%), and digital cameras (+6.2%).

The CTA reports a positive trend in consumer activity for device replacements initiated during the pandemic. Additionally, the integration of AI into various products is making them more enticing to consumers. Kowalski predicts strong demand for AI-enabled laptops, as processing occurs at the network edge, enhancing privacy.

In 2024, the market for laptops is expected to rise to 53 million units, a 4% increase from 2023. While the PC market is saturated, AI processing capabilities are expected to draw consumer interest.

Notable trends include an 11% increase in spending on live TV streaming services, expected to reach nearly $11.8 billion, fueled by high-profile sports events. Also, the gaming sector is set to surpass $50 billion in spending, reflecting a 3% rise over the previous year.

Methodology

The CTA has provided biannual forecasts since 1967, covering over 125 consumer technology products and services. This benchmark guides manufacturers, retailers, financial analysts, and policymakers, offering insights into industry dynamics and opportunities.