Recovery in Sight for IT Spending?

Posted by Mark Brousseau

The U.S. recession keeps getting worse than Forrester and many economists had expected.

Instead of the 2 percent to 3 percent drop in real gross domestic product (GDP) that the United States experienced in the 1990s and 2001 to 2002 recessions, U.S. real GDP fell by more than 6 percent in the fourth quarter of 2008, and will fall by a similar amount in the first quarter of 2009, with more (although lesser) declines until the end of 2009, Forrester predicts.

The steep drop in economic growth in the fourth quarter both caused and reflected a similar fall in technology purchases, Forrester said. As a result, the research firm now expects U.S. business and government purchases of IT goods and services to decrease by 3.1 percent in 2009, compared with the 1.6 percent increase it had previously projected for the year.

Computer equipment purchases will continue to bear the brunt of cutbacks in technology investment, Forrester says, but purchases of network equipment, software licenses, and IT consulting services will also drop.

As the US economy starts to recover in late 2009, Forrester believes IT purchases will revive strongly, with strong growth projected for 2010.

What do you think? Post your comments below.