U.S. technology executives predict IT spending will grow more quickly in the next 12 months than economists and industry analysts believe, according to the monthly FutureScan report on IT spending by analyst firm IDC.
IDC polled 359 IT buyers in January and found they on average expect IT spending to grow 7 percent over the next 12 months, said John Gantz, chief research officer for the research group in Massachusetts. Yet IDC, which bases its forecast on a host of market indicators, predicts IT spending will grow only 5 percent in the same time period.
IDC market indicators for IT spending growth include Wall Street expectations for the profits of publicly traded IT companies, the U.S. gross domestic product (GDP) forecast and predictions from several hundred economists from around the world, he said.
The U.S. government said the GDP experienced year over year growth of 1.1 percent for the fourth quarter of 2005, which was lower than the normal growth of about 3.5 percent, Gantz said.
During the same time period, chief information officers and line-of-business executives at technology companies also were bearish about IT spending growth, according to Gantz. "We're coming off a deep depression that took place in October," he said, attributing this dip in IT spending forecasts to the aftermath of the Hurricane Katrina disaster in the U.S.
In January, however, forecasts about IT spending rebounded among buyers polled by IDC, and they were more optimistic about growth in this area than they had been in a year, according to IDC.
If executives continue to show this optimism for IT spending growth, the U.S. may have to revise its current GDP growth forecast for the next 12 months, which is 3.4 percent, Gantz said. "Economists may change their mind," he said.
(IDC is owned by International Data Group, the IDG News Service's parent company.)