The US Q2 2010 GDP Report: Good News For Tech, Not So Good For Employment

Andrew Bartels

While taking in the latest US GDP report and its implications for the tech markets, I have been struck by a pattern of US business putting its money into technology instead of people. Part of the increased tech investment is replacement of old servers and PCs, but most investment has been in technologies to cut costs and improve efficiency. These purchases have been good news for the US tech market, which (as I predicted) is growing strongly. However, it is not so good for the overall economy. The lift to US economic growth from business IT investment is a positive, but the corporate reluctance to hire new employees is making consumers reluctant to spend. Moreover, much of the business investment in computer equipment is flowing overseas in the form of imports of these products, which is also hurting US GDP growth. So, the strong outlook for the tech market is paradoxically contributing to a less robust outlook for the US economy.

The US Department of Commerce released its preliminary report on US Gross Domestic Product in Q2 2010 last Friday, July 31, 2010, and today posted more detailed numbers on business investment in computer equipment and communications equipment. In addition to providing Q2 2010 data, there also were revisions in data for business investment in computer equipment, communications equipment, and software for 2007 to Q1 2010. So, let’s look at what the latest data is saying about the state of the US tech market.

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Launching A New Blog On Tech Economics

Andrew Bartels

With Forrester’s new blogging platform in place, I have the opportunity to launch a series of blogs about tech economics.  What do I mean by tech economics?  To me, tech economics first means how the larger economy and the tech sector interact.  I am interested both in how economic conditions impact the demand for technology goods and services and how business and government purchases of these tech goods and services affect the economy as a whole and the industries and firms in the economy.  Second, tech economics is about the revenue of tech vendors, both what they are reporting in the present and past and what we expect those revenues will be based on future purchases by their business and government customers.

 

My published research on the US and global IT market outlook, industry, regional, and country IT purchase trends, big trends like Smart Computing, and the ePurchasing software market (which I also cover) will continue to be my platform for addressing tech economics.  However, I want to use this blog to talk about four focused aspects of the tech market: 1) tech data sources; 2) tech industry definitions; 3) tech market developments; and 4) tech market dynamics.   Let’s call these the 4Ds of tech economics, and each will have its own strand of comments and observations.

 

D1: Tech data sources will be of most use to the data geeks like me in tech vendors.  These are folks who use my numbers in their own forecasts of the market for their firm and its products.  These blogs will talk about the data sources that I use in building my tech market sizing and forecasts, issues and questions about these data sources, and how the data geeks can leverage them.  I will share some (but not all!) of our secret sauce for our forecasts, and I hope you will share some of yours so we can all get better.

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