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5/24/2002
12:21 PM
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Another Economic Indicator Offers Some Hope

The federal government reports that spending on IT products is up.

There's more good economic news for IT vendors from the government. The U.S. Commerce Department on Friday reported that business spending on IT increased during the first quarter by 1.1% compared with the previous quarter, to a seasonally adjusted $573.6 billion in constant dollars. Though down 7.6% from a year earlier and $3.5 billion lower than an estimate issued last month, the first-quarter increase marked the first uptick in IT spending in a year.

IT spending represents 6.1% of the gross domestic product, which the government said rose 1.4% during the first quarter to nearly $9.48 trillion. The department last week reported that shipments of computer products rose 2.5% in April, reversing months of decline and suggesting that a tech recovery is under way.

While recent economic indicators are inspiring to those hoping for a turnaround soon, some economists remain guarded. Says William Baumol, an economics professor at New York University, "These are signs of improvement, but, frankly, you need a fortune teller with a crystal ball to see how much comfort you can take from them."

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