Forecast Report

US IT Market Outlook: Q1 2009

Our Bleak Alternative View Moves Closer To Reality

March 31st, 2009
With contributors:
Chétina Muteba , Ellen Daley

Summary

The US recession keeps getting worse than we and many economists had expected. Instead of the 2% to 3% drop in real GDP that the US experienced in the 1990s and 2001 to 2002 recessions, US real GDP fell by more than 6% in Q4 2008 and will fall by a similar amount in Q1 2009, with more (although lesser) declines until the end of 2009. The steep drop in economic growth in Q4 both caused and reflected a similar fall in tech purchases. As a result, we now expect US business and government purchases of IT goods and services to decrease by 3.1% in 2009, compared with the 1.6% increase we had previously projected for the year. Computer equipment purchases will continue to bear the brunt of cutbacks in tech investment, but purchases of network equipment, software licenses, and IT consulting services will also drop. As the US economy starts to recover in late 2009, IT purchases will revive strongly, with strong growth projected for 2010.

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