North America’s flat-screen television market has expanded over the past year, despite the troubled economy, according to a recent report by iSuppli Corp.

A total of 7.8 million flat-panel TVs were sold in Canada and the U.S. in the first three months of 2009, up 17% from the same period a year earlier, according to the report. This data should come as a pleasant surprise to the industry, which experienced a drop in sales during the fourth quarter of 2008 and had expected the trend to continue into this year.

The vice president of iSuppli’s displays division, Joe Abelson, attributed the higher sales to “cocooning” where consumers cut back on travel and luxury spending, but still find money to buy things for their homes.

Consumers are being cautious about which TVs they buy, however, often choosing cheaper models and shopping at discount stores such as Wal-Mart and Best Buy.