Stock Market Correction Unlikely to Affect IT Spending-For Now: Forrester Tech Spending Growing Faster Than the GDP

By Wayne Rash  |  Posted 2011-08-08 Print this article Print

Bartels did note that while IT spending is growing faster than the GDP, it could be a lot better. For that to happen, he said, consumer confidence needs to start rising again, encouraging companies to hire more people. That, in turn, would increase the demand for products and services, and would eventually encourage more IT spending. Of course, it would also cause the GDP to rise.

The rich, of course, are different. The one area of solid growth in the consumer market is spending by the wealthy. He said that high-end retailers are growing quite a bit faster than mid-range retailers. This means that those high-end retailers will also spend more on IT than they might otherwise. However, Bartels did note that wealthy consumers are more likely to be affected by major changes in the stock market if those changes last long enough.

Right now, however, there's nothing to indicate that tech spending will be affected by a week's worth of turmoil. The Standard & Poor's change to the U.S. credit rating hasn't been followed by a change in interest rates, and other rating agencies haven't followed suit, suggesting that S&P is an outlier. The question is whether the sharp drop in the Dow Aug. 8 will be followed by even a modest recovery later in the week. If the Dow starts gaining ground as the week moves on, then all this stock market drama was just that-drama.

The bottom line is that while a series of economic burps may make news (not to mention some great buying opportunities), it does not define the broader economy. Tech buying depends on the overall economy and on the need by companies to improve efficiency and productivity.

What will take the wind out of the sails of the tech industry is something that has a broader effect on the economy in general, such as a major reduction in federal spending, a loss of confidence in the U.S. caused by more gridlock in Congress or a long-term failure to resolve the basic problems with the economy. One week on Wall Street, as bad as it was, won't do it alone. 


Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

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