US IT Market Outlook: Q2 2008

With Q1 2008 data now in for both the US economy and the US tech market, the year has started out much as we expected. The data so far supports our projection that the US market for technology goods and services will see a slowdown in growth in 2008, to 3% from 6% in 2007. This slow growth rate is mainly due to an assumed mild, two-quarter recession in the US economy. However, the Q1 economic data showed that the US economy was still growing, albeit sluggishly. The IT market data also showed weak but positive growth, with surprising strength in IT services and outsourcing. While some optimists think that these are signs that the US economy will avoid a recession, the effects of higher gasoline prices and declining employment are more likely to mean that both US economic activity and IT purchases will turn down in Q2 and Q3. On a positive note, both the economy and the US tech market will start to improve in Q4, with tech purchases poised for much stronger growth in 2009.