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Posted by Andrew Bartels on September 30, 2012
When I do my US tech market sizing and forecasting, I start with the data on business investment in computer equipment, communications equipment, and software in the quarterly National Accounts of the US Bureau of Economic Analysis (BEA). As Forrester’s recently published report on the US tech market noted (see September 28, 2012, "US Tech Market Outlook Dims For 2012 To 2013 -- US Tech Market Spending Will Maintain A Mediocre 4% to 5% Pace"), the BEA in July revised the historic data on these categories of business investment going back to 2009, significantly reducing the size of tech investment in this period and lowering the growth rate of business tech investment to a pace not appreciably faster than the growth rate in the US economy.
While I adjusted my tech market sizings and forecasts to these lower numbers from the BEA, I have been wondering whether the BEA in their data collection is missing key segments of new technology, and thus understating the level of tech buying that is actually going on. We have no good way of answering this question since the BEA has not publicly indicated that there have been any changes in data sources and aggregation methods that would signs of undermeasurement. Still, here are the questions I would ask BEA if I had the chance.
These are fairly esoteric tech investment accounting issues. But I bring them up because they matter to Forrester's tech market forecasts. Our sizing and forecasting methodology rests on government data like the BEA's. We base our forecasting models on these data sources, and we compare our forecasts with updated data from these sources to see where our forecasts turned out to be accurate or off base. Put another way, they keep us honest. But when this source data starts to deviate from other data sources that we track in large and significant ways, that becomes a problem. We will continue to base our forecasts off of these data sources, because in my view that is critical to the integrity of our numbers. Still, I think it is helpful to our clients to learn when we have questions about those data sources -- especially when they are subject, as BEA data is, to large annual revisions -- and when we think they may overstate or understate reality. In this case, I suspect that the tech market condition was actually better than the BEA data is portraying it in 2010 and 2011, not as positive as the BEA is saying so far in 2012, and likely to be better in 2013 than the BEA data will show in coming quarters.
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