We’ve been joking lately about the weather reports here in coastal New England, because when the meteorologists start telling us to batten down the hatches in preparation for a horrible winter storm—putting the town in a tailspin — it’s a good bet it’s a false alarm. While it doesn’t seem like a big deal, when school gets canceled and travel is rearranged, it creates a disruption on the home front.
Similarly, on the work front, it feels like we’re being bombarded by “post-recession reports” from industry experts and watchdog groups predicting a turnaround in the economy based on forecasts of new spending and production increases.
Two weeks ago, it was the Manufacturers Alliance/MAPI reporting a rebound in consumer spending that it said will lead to 2.8% growth in gross domestic product (GDP) this year, followed by 3% growth in 2011.
Yesterday, the American Machine Tool Distributors’ Association (AMTDA) and the Association for Manufacturing Technology (AMT) released the U.S. Manufacturing Technology Consumption (USMTC) report, noting that last month, technology spending was up 26.2% from the year-ago period.
And, today, IT industry analyst firm Ovum issued a press release outlining a new study that indicates IT spending is on the rise in 2010.
There is a caveat in each optimistic outlook, however. MAPI says there must be a reversal of the current employment conditions to ensure a complete recovery. The USMTC report of a 26.2% upturn in technology spending looks rosy, but February spending was down 40.3% from December 2009. And Ovum’s IT report notes that while there is an indication of an increase in IT spending this year, it’s only inching up 1% to 5%.
“The survey data, while promising, does not translate into an IT spending recovery,” said Ovum senior analyst, Rhonda Ascierto, in a statement. “Realistically, the numbers more likely reflect the effect of previously deep budget cuts, during 2008 and the first half of 2009, which left many IT departments operating at ‘bare-bones’ capacity.”
The bottom line is, we can slice and dice the data all day long in an attempt to paint a bright outlook, but, like the meteorologists, we really don’t know what’s going to happen. The financial forecast for U.S. manufacturing is sunny with a chance of a severe storm. Let’s prepare for the best and hope that storm doesn’t hit again.
One Comment
I expect the reason for IT spending being up, is the need for better tools for analysis. Not really an indicator of overall recovery. Some of the books published on this “New Economy” indicate that this is where spending should be spent to get better analysis, and make better decisions. We here are also upgrading IT infrastructure, we see the value in getting accurate data faster, so we can respond quicker and more wise.