IT growth expected, if Washington fosters stability

Computerworld - JPMorgan, Forrester and IDC all recently lowered their IT spending forecasts for the year. Gartner did so in June.

Analysts don't agree on the extent of the problem, but most broadly blame Europe and a slowdown in China, along with a stronger U.S. dollar. The catchword is uncertainty.

JPMorgan warns that uncertainty related to U.S. government spending, both before and after the November elections, could weigh heavily on the IT sector.

Forrester is more blunt. The U.S. is experiencing an improving housing market, growth in the auto industry, low interest rates and lower energy prices. These forces could set the stage for stronger economic growth, "if politicians don't blow it," argues Forrester analyst Andrew Bartels in a new report.

Washington must set policies that lead to stabilization, analysts said.

For now, most analysts agree that there will be some IT spending growth, but it may not be as strong as they once expected. Forrester recently lowered its forecast to 1.3% from a January prediction of 5.4%. IDC is the most bullish, forecasting 6% growth. It notes that software spending is particularly strong.

But JPMorgan warned that up to 40% of the growth is at risk if spending slows as a result of economic turmoil.

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.

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