The West Expected To Lead U.S. IT Spending

Overall spending by U.S. businesses is expected to increase 4.7 percent by the end of 2004, but the recovery in the IT market will vary from region to region, International Data Corp. said.

In the West, California and Texas will lead because of the number of discrete manufacturers in both states, particularly in the high-tech manufacturing and defense industries, IDC said.

"Both those industries are expected to do well," IDC analyst Jessica Goepfert said, noting that computer makers Dell, IBM, Sun Microsystems, and others, as well as semiconductor makers, are expected to help drive the increased spending within manufacturing.

IT spending in California alone, for example, is expected to increase 5 percent this year, from the $37.9 billion spent last year, the analyst firm said.

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The Northeast, the South, and the Midwest are expected to see less IT spending. The financial industry, a major contributor to IT growth in the Northeast, is still recovering from Wall Street scandals that have made institutions cautious about spending, Goepfert said.

The Midwest, on the other hand, is home to the nation's major carmakers, which have cut back because of sagging profits.

Nevertheless, IDC is optimistic about the U.S. economy in general, predicting 4.6 percent growth in the nation's gross domestic product for the year. "As the GDP improves, corporate profits improve and IT spending improves," Goepfert said.

The firm was less optimistic about the job market, which remains slow to recover, as companies have been able to boost productivity without hiring more workers.

"It's still somewhat troubling," Goepfert said. " We're on the road to [job] recovery, but we're not out of the woods, yet."

*This story courtesy of Techweb.com.