The last few weeks have been depressing for the technology sector in the USA. Disappointing earnings growth and depressing outlook statements provided by most of the tech firms highlight the low investment climate in the US and the dark clouds that continue to hover over the global economies. With the high dependence on global sales that American tech firms have and worries about the impending fiscal cliff, a move towards a second recession caused by tax cut reversals and higher costs imposed on some sectors could cause further declines in capital goods orders and discretionary spending by corporations which is not good news for IT folks! Being the proverbial “canary in the coal mine” or a barometer of the global economy, as one San Francisco portfolio manager has called it, the weakness in tech does not augur well for the global economic recovery either.
Ten days in the US with meetings on both coasts gave one the confidence that the White House, with the President in his second-term will pull out all the stops to engage corporations and politicians across the great divide to stop the economy from careening over the fiscal cliff. And it’s not all bad news for the US economy either. Housing is coming back which is always a good sign and consumer debt is at record low levels with most Americans having slowed down on their propensity for profligate spending in the last couple of years. The confidence in technology innovation and energy independence is also leading to the conviction that American manufacturing is coming back which will create the jobs and cascading prosperity that has been missing in the US for many years. And whether or not one believes the “greatest nation on earth” assertion that President Obama made in his acceptance speech, there is no doubt that a robust America is the surest hope for a stronger global economy in the medium-term.
Interesting trends have emerged too in the adoption of cloud, big data and social media in American corporations. While social media companies like Facebook and Zygna have lost their way and their market capitalisation