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The U.S. economy roared back to life in the third quarter, with the nation’s gross domestic product rising 3.5% on an annual rate through the July-to-September period. This is certainly good news, but already skeptics have been raising questions about whether the possible end to the recession is real.

The question on most economists’ minds is whether the surprisingly strong gain was a reaction to an array of government incentives. Among other things, the government pumped money into the economy through the “Cash for Clunkers” program, a first-time home-buyer tax credit, and a massive federal stimulus program focusing on such areas as healthcare.

Certainly the government actions helped boost spending but there have been a number of signals from the IT sector in particular that the economy has turned a corner. Technology vendors and CIOs aren’t yet predicting increases to spending budgets, but they are seeing a firming up of budgets along with signals that new spending may not be far behind.

In reporting its third quarter results last week, EMC struck a decidedly upbeat tone. “Customers are signaling more comfort spending their IT budgets, which gives EMC confidence in our ability to perform well and achieve our full-year 2009 targets,” chief executive Joe Tucci stated.

Similarly, when IBM reported its third quarter results earlier this month, it boosted its profit guidance for the second time this year. Chairman Sam Palmisano acknowledged some of that profit boost was due to cost controls, but not entirely. “We also saw improved revenue trends in our business and share gains in software and hardware,” he said.

In an interview published in the Wall Street Journal Thursday, Intel Chief Financial Officer Stacy Smith offered perhaps the most positive outlook, saying there was evidence corporations are once again looking to increase technology spending. “Our sales guys are picking up more interest at corporations,” Smith is quoted as saying.

And we’ll throw one more market trend into the mix. Earlier this month research firm IDC reported global PC shipments ended a string of declines in the third quarter of 2009 and posted a 2.3% increase.

The combination of these results is encouraging. It is difficult to factor in whether the government incentives have artificially boosted the economy, but at least from the perspective of the technology sector, all signals are that spending isn’t going backwards, and may in fact be moving forwards.
 

Comments (4)

	1. 11-02-2009 15:42
	Planning around the recovery is certainly a difficult task; the positive signs are encouraging, but then there are red flags like warnings in the commercial real estate market, jobless recovery and what happens when the stimulus efforts dry up. We live in interesting times, and so focus on IT investments that have a strong ROI regardless of the economic climate remain at the top of the list. Registered

Fred Kauber

	2. 11-02-2009 15:42
	Planning around the recovery is certainly a difficult task; the positive signs are encouraging, but then there are red flags like warnings in the commercial real estate market, jobless recovery and what happens when the stimulus efforts dry up. We live in interesting times, and so focus on IT investments that have a strong ROI regardless of the economic climate remain at the top of the list. Registered

Fred Kauber

	3. 11-03-2009 09:21
	If the economy continues to strengthen throughout 2010, I think we can expect to see a general uplift in IT spending as companies become less cautious about making needed infrastructure investments and as they identify opportunities for growing revenues.    There's also a very cyclical component to IT spending. For instance, some organizations that have postponed desktop refreshes for four or five years are making those investments now. Meanwhile, some CIOs for companies in hard-hit industries have said that they're standing pat with infrastructure investments they've made over time. Registered

Tom Hoffman

	4. 11-12-2009 03:23
	Assuming companies are willing to spend more in 2010, where will the key areas of IT expenditure be? Registered

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