The forecasts keep changing and with them the fiscal policies of the economic watchdogs. Electronic industry executives seem puzzled, too, wondering which demand environment they should be producing for: stable, declining, average or strong growth.
"An outright decline in gross domestic product growth this quarter is a very real possibility," said David Rosenberg, an economist with Merrill Lynch. "Contractions have a way of feeding on themselves, since the reality of declining activity can cause producers to throttle back on production."
Electronics executives understand this dynamic. When demand falls, they need to tamp down on production. However, they aren't seeing the decline Rosenberg and others are talking about in orders from customers.
Industry executives admit to not knowing enough to make a definitive decision about the level of production they should maintain since orders from OEM customers remain relatively unchanged. So, they are manufacturing to orders and hoping the OEMs have the forecasts right. Haven't we been down this road before?