Yesterday’s Sunday paper brought with it the usual mound of advertising inserts and glossies, most of which I dutifully put right into the recycling bin. However, since I hadn’t checked HDTV prices in a while, I decided to peruse the Best Buy and 6th Avenue Electronics flyers in more detail.

Perhaps motivated by a slew of recent disappointing economic forecasts (higher unemployment, weak consumer confidence, slower growth in manufacturing orders), it seems both retailers have decided to get a head start on the holiday selling season.

Best Buy didn’t leave anything to chance. The front page of their flyer shows a combination home entertainment package, built around Panasonic’s TC-P50G10 50" 1080p plasma TV, that includes a 7.1 channel receiver with Blu-ray player, six main speakers, and a subwoofer.

That might seem like nothing special - except that Best Buy tagged the package deal at $1,399.98, which is one penny less than what the TC-P50G10 sells for by itself! That’s very aggressive discounting and it amounts to giving a customer the BD player, receiver, and speakers for free if they buy the plasma TV. (Of course, there’s a separate reminder to buy a Monster eight-foot, THX-series HDMI cable - no price given.)

Across the street at 6th Avenue, you can pick up a Toshiba 40-inch 1080p LCD set for $598. Need something larger? How about a 58-inch Samsung 1080p plasma set for $1485? Not big enough? OK, here’s a Mitsubishi 65-inch DLP rear-projector for just over a grand.

Everyone’s getting into the act. Westinghouse Digital recently announced a 42-inch, 120 Hz LCD TV for $750 (you read that right), while brick and mortar retailer Frye’s briefly had an LG 47-inch 120Hz set advertised for $999 last week - and it’s an Internet-enabled TV, too. That price could be a new low for 46/47-inch TVs…except that 6th Avenue has a Samsung 46-inch 1080p offering for $970.

As I write this, we’re looking at a sunny, 70-degree day here in eastern Pennsylvania, and the leaves on my trees are only starting to turn color. I had to check the calendar a few times to make sure it wasn’t Black Friday!

These very aggressive discounts come just as the college and pro football seasons are heating up, and the conventional wisdom has been that nothing sells big screen TVs better than football. Unfortunately for manufacturers and retailers, conventional wisdom isn’t working. 26-inch to 32-inch TVs continue to dominate new HDTV sales, creating an absurd situation where you can now buy a 42-inch 1080p set for $50 less than a 32-inch 1080p set.

So, what does this mean to manufacturers? Any prolonged slump in North American big screen TV sales will have a chilling effect on fab expansion, particularly in Japan. Sure, one can get more glass cuts in smaller sizes out of larger fabs, but profit margins are much lower on the finished products - and most fab expansions are undertaken to achieve cost efficiencies on larger TV screens.

Indeed, LCD behemoth Sharp is apparently considering building its next LCD fab in China, according to a recent article at Forbes.com. According to the article, Sharp expects their overall China sales, including household appliances and other products, to jump by $100 million from two years ago to $4.4 billion. In contrast, Sharp is figuring its U.S. revenues will slump to $4.6 billion from $6.5 billion in fiscal 2007 - a decrease of almost 30%.

With leading economists predicting a slow recovery for the U.S. economy through 2010, it’s expected that the upcoming holiday selling season will be mediocre at best for TV manufacturers and retailers. Will that lead more Japanese companies to take the plunge and build new fabs in China, despite their long-time fears about losing control of their best ideas and technologies to the Chinese?

They may not have any choice. DisplaySearch has said that China will become the world’s largest LCD TV market by 2012, and manufacturers have to follow the money. In the meantime, DD readers can do their part to help the economy by getting out there and buying a new big screen LCD or plasma TV.

After all, it’s not like they cost a lot of money - right?