Anticipated Slowdown Predicted by CircaNA in Their Midyear Outlook Report
The U.S. consumer technology market, which experienced a 1.5% revenue increase in the first half of 2025, is expected to see softer results in the second half, according to Circana's retail tracking forecast.
The expected slowdown is primarily due to the waning of early-year pull-forward consumer purchasing, ongoing economic uncertainty, and cautious consumer spending behavior. This shift towards more cost-conscious buying has led to trade-downs to lower-priced products across various categories.
Pull-Forward Purchasing Effect
Significant purchases of IT products, especially notebook and desktop PCs, occurred early in the year, producing strong growth. However, this advanced buying pulled demand from later months, causing a natural slowdown in the second half.
Economic Uncertainty and Inflation
Persistent inflation and general economic uncertainty are pressuring consumer spending, causing buyers to prioritize affordability. This trend is particularly evident in categories like televisions.
Shift in Consumer Priorities
Some tech categories, such as soundbars and smartwatches, are expected to see spending declines as consumers focus their budgets on higher priority or more essential tech upgrade cycles.
Category-Specific Trends
While overall growth softens, innovation and new form factors spur strong increases in niche areas such as smart glasses, smart rings, and digital point-and-shoot cameras. However, these gains are not enough to offset slowing sales in larger categories.
PC Market Dynamics
The PC market underwent a refresh cycle boosting sales early in 2025, but this effect diminished by mid-year, moderating growth in the second half.
Home Audio Products
Home audio products, including traditional home theater speakers, receivers, and soundbars, are showing a decline. Consumer survey research suggests that soundbars may see a bigger drop-off in demand if prices increase.
On the other hand, there is a market, albeit not huge, for DVD players and record players. Interestingly, the styling of portable Bluetooth speakers resembles old-style radios from the 1960s and 1970s, which may resonate with a new generation of buyers.
Digital Point-and-Shoot Cameras
Point-and-shoot cameras, a product once thought obsolete, are showing an unexpected revival, particularly in the digital content creator community. Digital point-and-shoot cameras under $200 have shown significant growth, with a strong market for older models in the secondary market.
TV Sales
Sales of larger TVs (75-inch and larger) have been strong and are expected to remain so in the second half of 2025. However, televisions felt the impact of trade-down behavior in the first half of 2025, and second-half growth is not expected to be significant.
Impact of Tariffs
The impact of tariffs is likely to affect consumer purchasing decisions this year. Consumers may delay or postpone a purchase, switch to a lower price point version, or a different brand or model to offset cost increases due to tariffs.
Forecast
Despite the expected slowdown, full-year sales revenue is expected to finish 1% above 2024. The fourth quarter of 2025 is expected to be roughly flat compared to the fourth quarter of 2024, which was a strong period for technology spending.
Notebook and desktop PCs have shown significant growth, with respective dollar increases of 8 and 18% according to Circana's forecast. However, Circana will not be releasing a separate forecast before the holidays, with the next forecast arriving in January, before CES.
In summary, the combination of early-year pull-forward demand fading, ongoing economic headwinds, cautious consumer spending behavior, and category-specific trade-downs or slowdowns are the main factors driving the expected softer consumer technology results in H2 2025.
- Consumers are expected to prioritize affordable IT products, such as tablets and smartphones, due to ongoing economic uncertainty.
- The sales growth of niche technology categories like smart glasses, smart rings, and digital point-and-shoot cameras may spur innovation, but it might not be enough to offset the slowing sales in larger categories.
- Notebook and desktop PCs have shown substantial growth, with respective dollar increases of 8 and 18%, according to Circana's forecast.
- Despite the expected slowdown in the second half of the year, overall full-year sales revenue is projected to finish 1% above 2024.
- The second half of 2025 may not see significant growth in television sales, as they felt the impact of trade-down behavior in the first half of the year. However, sales of larger TVs (75-inch and larger) are expected to remain strong.
