Forecast Report

US IT Market Outlook: Q4 2008

Down, But Not As Bad As The 2001 To 2002 Tech Depression

December 9th, 2008
With contributors:
Madiha Ashour , Ellen Daley


The question for the US tech market is no longer whether the US economy is in recession — instead, it is how long and deep the recession will be and how much damage will it do to the tech sector. Forrester is still a relative optimist, believing that the recession will last into mid-2009, with declines in real GDP of as much as 3.6% on a quarterly basis. This kind of decline in the economy will pull growth in US business and government purchases of IT goods and services down to 1.6% in 2009, from 4.1% growth in 2008. The weakening of the US tech market was already evident in the Q3 2008 data, which showed US revenues of large vendors down by 2%. Computer equipment purchases are already in decline. Growth is slowing for purchases of network equipment, software purchases, and IT consulting and outsourcing services. Continued declines in purchase are in prospect for computer equipment purchases in Q4 2008 and the first half of 2009, with little or no growth in communications equipment and IT services. Software growth will slow to as little as 2% in coming quarters. Still, we do not expect to see the 15% to 20% declines in tech purchases that happened in the 2001 to 2002 tech downturn.

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