Tech Spending Will Be Weaker In 2009 Than Predicted - InformationWeek

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Tech Spending Will Be Weaker In 2009 Than Predicted

The good news is that tech spending will be better than expected this year. The bad news is that next year things will be worse, said Forrester Research.

The good news is that tech spending will be better than expected this year. The bad news is that next year things will be worse than originally predicted, said a new report released Tuesday by Forrester Research.

Tech spending in 2008 will grow to $572 billion, up 5.4% from 2007. That's better than Forrester's original projections that tech spending would inch up only 3.4% in 2008.

However, IT spending in 2009 will rise 6.1% to $606 billion. That's better than 2008, but not nearly as robust as the 9.4% growth in IT spending Forrester had projected for 2009 earlier this year.

"There's been a delay of the pain," said Andrew Bartels, VP and research analyst at Forrester Research. "Instead of the pain being over and done by next year, it'll be prolonged into next year."

Forrester already had been working on its revised forecasts before the latest bombshells from Wall Street this week. However, the analyst firm moved up the release of its report in part because of the news yesterday about the bankruptcy-court filing by investment firm Lehman Brothers, the shotgun sale of Merrill Lynch to Bank of America, and the resulting 504-point nosedive on the Dow Jones industrial market.

Although the dire situation in the financial markets certainly doesn't help bolster tech spending -- especially given that the financial sector is one of the biggest buyers of tech products -- the decline in Forrester's IT spending projection for 2009 reflects bigger-picture trends in the U.S. and global economy, Bartels said in an interview with InformationWeek.

"There are a number of factors that helped growth of 2008 IT spending, and those factors are gone now," he said. Factors that helped propel IT spending in 2008 include the U.S. economic stimulus checks that were mailed out in the spring, as well as the weak U.S. dollar and strong U.S. exports. "Now the dollar has improved a bit, but the export markets, especially Japan and Canada, are slowing down," he said.

Also, U.S. government statistics show that U.S. consumer spending is down, while the United States has been losing 50,000 to 80,000 jobs per month.

"The state of growth in the U.S. economy has the biggest impact on the tech market," he said.

Meanwhile, on Tuesday, Dell reported a further softening in the global IT market.

For more information about IT spending and best practices in the financial services and other sectors, check out the newly released 2008 InformationWeek 500 Analytics Report here.

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