The current constraints on consumer spending could lead to a boom in spending on electronics products later this year, suggests Bill Jewell’s Semiconductor Intelligence.

The National Bureau of Statistics of China reported combined January and February 2020 production of mobile phone units was down 34% from a year ago, and the total value of Chinese industrial production in January and February was down 13.5% from a year ago.

The top five notebook computer brands (HP, Lenovo, Dell, ASUS and Apple) saw combined shipments in February 2020 drop 40% from January and drop 38% from a year ago.

So, concludes Jewell, even if COVID-19 is contained by the end of June, production in the second half of the year will not fully compensate for lost production in the first half.

The demand side is a different story. Consumer spending will be affected because many restaurants, bars, clothes shops, movie theaters and other entertainment venues are closed and travel for pleasure is severely curtailed.

With spending on these areas severely cut back, households will have more discretionary funds. Much of this extra money will be saved and some of it will be available to spend on durable goods such as electronics.

After the 9/11 attacks, air travel was disrupted. IATA estimated air travel demand was down by over 31% in the five months following the attacks. Much of the money people would have spent on air travel and other vacation expenses was spent on consumer goods.

As the 2001 recession ended, the increase in spending between Q3 and Q4 was 26% for new automobiles, 5.3% for communications equipment, 4.4% for televisions, and 2.2% for PCs and peripherals. Total consumer expenditures were up 1.6%.

Could a similar trend result when the world economy begins to recover from COVID-19? It is a possibility.

Even when the risks of infection decrease, people will still be reluctant to travel. Fear of COVID-19 may also delay returns to restaurants and entertainment venues.

People could spend more of their money on electronics, most of which can be enjoyed in the safety of the home.

Assuming COVID-19 is contained by the end of Q2, supply and demand should return to normal levels and demand could possibly exceed normal levels in the second half of 2020.