IT Sector's "GDP" Is on the Rise

You can learn a lot from GDP data. GDP (gross domestic product or the total market value of all final goods and services produced in the U.S.) is not just a macroeconomic measure. Within GDP data are rich data subsets that report the total investment in things like IT-related goods and services.

In the chart above, the red line tracks changes in private fixed investment made in IT equipment and software since 2004 as found in national GDP data. The blue columns in the chart represent IT employment numbers for each year as tracked by TechServe Alliance.

By combining IT employment trends with IT sector "GDP" data, a clear picture of the industry’s recent trajectory emerges. The IT sector is in recovery mode. IT's "GDP" results have been in positive territory since the second quarter of this year and continue upwards. Fixed investment made in IT equipment and software increased 8.9% in the third quarter of 2009 compared to the third quarter of 2008. That increase is a 5.5% rise from the first quarter of this year.

IT employment is also improving. While it didn't experience sustained decline until the fourth quarter of 2008, IT employment was down less than one percent (0.8%) in the third quarter of 2009 compared to the second quarter of 2009. IT sector employment did grow in both the last month of the third quarter and October.

Private organizations like Forrester Research, which bases some forecasts on GDP, wrote that "the U.S. tech market will start to recover from the downturn in Q4 2009" Forrester advised in its Blog for Vendor Strategy Professionals that "it is safe to say that the worst of the tech decline is over, with prospects for 2010 looking positive. Vendors need to look beyond the downturn and get prepared for a strong tech recovery in 2010."

Sources: TechServe Alliance & Bureau of Economic Analysis (BEA)