Executive Summary (This is a document excerpt)

Second-quarter 2005 data from both US government and vendor sources on business investment in information technology goods showed slightly stronger growth of 7% to 9%, depending on the measure. However, the big news was the US Commerce Department's downward revisions of data on business investment in computer and communications equipment from 2002 to 2004 and Q1 2005. These changes, along with updated data on IT staff costs and IT services and outsourcing, reduced our historic estimates of IT spending and new investment from 2002 to 2004 — and thus the levels of IT spending in 2005 and 2006. However, they don't change our forecast that US IT spending in 2005 and 2006 will grow by 7% in each year. Investment continues to be strongest in computer equipment, fairly solid for software, and soft in communications equipment. Purchases of IT services are showing the first signs of growth in a while.

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