July 03, 2002

The Boom in IT Investment

Real gross investment in IT relative to real GDP. The series is in chained 1996 dollars, so the relative levels are equal to nominal spending levels in 1996. We could choose an earlier base year, and blow up the apparent salience of IT investment today. We could choose a later base year, and reduce somewhat the salience of IT investment today.

The first thing to note--the thing that is invariant to the choice of base year--is the extroardinary rise in the relative salience of IT, and how quickly it was accomplished. The second thing to note is how small the real decline in IT investment in the current recession has been. It erased less than two years' growth in relative real IT investment.

Real Investment in Information Technology Equipment and Software Divided by Real GDP

ChartObject Chart 1

From the National Income and Product Accounts prepared by the Commerce Department's Bureau of Economic Analysis. Real gross private investment in information technology and software divided by real gross domestic product [GDP]. Note that this is not a "share": it is just two series of numbers, one divided by the other.

Posted by DeLong at July 3, 2002 02:30 PM | TrackBack

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