US IT Market Outlook: Q3 2008

The 2008 US recession and related slowdown in the US tech market has been delayed, not cancelled. With Q2 2008 data now available for both the US economy and the US tech market, growth in both areas was surprisingly strong. The US economy grew by 3.3%, while business investment in IT equipment and software rose by 11%. Below the surface, conditions were much weaker, with US real domestic purchases barely rising and US revenues of large vendors up by just 4%. The outlook for the second half of 2008 is even gloomier, starting with the Wall Street meltdown. The props under US economic growth in the first half of 2008 will fade in the second. The resulting recession will slow growth in the US market for technology goods and services in the fourth quarter, with continuing weakness in the first half of 2009. Computer equipment will bear the brunt of the slowdown in 2008, but network equipment and software purchases, while still growing, will see slower growth in 2009. And IT services purchases, which so far have defied the gravity of slow growth, will start to see little or no growth.