IT Plays Big Part In GDP Growth - InformationWeek

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Software // Enterprise Applications

IT Plays Big Part In GDP Growth

The IT component of gross domestic product grew at an annual pace of 16.5% in the fourth quarter, its best performance of the year.

Look at it anyway you'd like--IT is becoming a bigger component of the nation's economy, at least as a measure of the nation's gross domestic product.

The Commerce Department Friday reported that GDP, the broadest measure of goods and services produced in the United States, rose at an annual rate of 3.1% in the fourth quarter. The October-December period's growth rate was the slowest since a 1.9% increase in the first quarter of 2003. For all of 2004, GDP increased 4.4%, its best yearly performance in five years when GDP advanced 4.5%. In 2003 GDP rose 3.0%.

But the IT sector did much better. The IT component of GDP grew at an annual pace of 16.5% in the fourth quarter, its best performance of the year. For all of 2004, the value of IT wares produced domestically rose 16.2%.

The annualized value of IT equipment and software produced in the fourth quarter reached $599.4 billion. A year earlier that figure was pegged at $492.4 billion. The value of information-processing equipment and software represented 5.5% of GDP in the fourth quarter, up from 4.8% a year earlier.

The IT contribution represents more than one-fifth of the fourth quarter's 3.1% GDP advance. IT's share as a percentage of the GDP growth rate fluctuates quarter to quarter. In the third quarter, IT's share of GDP growth was 7.5%. In the third quarter of 2001 IT represented 37.9% of GDP growth.

The GDP report comes one day after the government said orders for IT wares designed to last three or more years rose by a seasonally adjusted 8.8% in December. That compares with an overall durable goods increase of 0.6%.

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