ALAMEDA, CA – A leading EMS research firm lowered its five-year forecast for electronics production and EMS growth, saying, “economic drivers behind the numbers are a clear signal that the U.S. is in a recession.”

Technology Forecasters also raised its forecast for ODMs, based on final 2007 electronics manufacturing data. The firm now predicts the total available market will grow an aggregate 6.1%; EMS will rise 11.2%, and ODMs will jump 18.5% through 2011. The overall market for outsourced goods and services hit $292 billion in 2007, TFI said.

In September, TFI forecast growth rates of 7.1% for the TAM, 13% for EMS and 11.9% for ODMs.

TFI will look at causes behind the spike in ODM growth July 31 in a Boston meeting.

According to TFI’s top economist, the US is in the midst of a recession and there’s no end in sight. "I do think we're in recession," said senior economist Matt Chanoff. "And I do think it will take a while to work out the weaknesses that are keeping the economy slow."

Chanoff pointed to lingering weakness in housing and inflated energy and food prices. He noted the housing slowdown is now gripping several other nations in Europe and Asia as well as the US. Higher prices for staples like food can stall consumers from buying cell phones, computers and other related durables, he said.

"As the economic boom continues, huge numbers of people have crossed the buying threshold for electronic gadgets in Asia in recent years," Chanoff notes. "Now high oil and high food prices are raising the threshold."

As reported on TFI’s Bill Roberts’ blog, Chanoff predicts US gross domestic product growth could remain near the bottom as long as through the first quarter of next year. “We might rebound and see a strong end to 2009," he said. 

Chanoff suggests electronics manufacturers consider reducing inventory and focusing on markets outside the US as mitigation strategies for the near-term US slowdown.