For the past year, the Federal Reserve has maintained that its primary economic goal is a “soft landing,” or successfully controlling inflation without spiking unemployment and triggering a recession. Last Friday, after the announcement of unexpectedly strong US December job numbers, Treasury Secretary Janet Yellen declared, “What we’re seeing now, I think we can describe as a soft landing, and my hope is that it will continue.” This could mean that the Federal Reserve will begin to cut interest rates, improving mortgage rates and lowering the cost of capital. But even this, though encouraging, is no confirmation of a stuck landing, with several factors possibly derailing growth. The IMF therefore forecasts sluggish 1.5% US real GDP growth in 2024 — half the rate of the global economy.
Tech Growth, Fortunately, Will Be Stronger Than The Overall Economy
Forrester forecasts that US tech spend will increase 5.5% in 2024, up from 4.5% in 2023. The earnings per share of IT companies in the S&P 500 will continue to surpass the others in the index. Software and IT services are robust drivers of US gross output. In 2024, tech spend resilience will be driven by:
- Software. In 2024, software spend will grow almost twice as much as any other category, and more than half of US tech spend growth from 2024 to 2027 will come from software. Prepackaged software will have the fastest growth. Cloud will also dominate: Microsoft’s annual cloud revenues grew 27% to surpass $110 billion in FY 2023, with Google Cloud growing revenues 26% in the first nine months of 2023.
- Financial services. Despite the collapse of SVB and 11 Fed base rate hikes since March 2022, US banks saw robust technology spend in 2023. JPMorgan Chase, Citigroup, and Bank of America grew technology spend with a focus on cloud, digital transformation, data, platforms, customer experience, and AI. Even the Federal Reserve itself is getting in on the act as it develops the real-time payment infrastructure FedNow to implement digital wallets and peer-to-peer mobile payments.
- Healthcare. In 2023 to 2024, 88% of US healthcare providers plan to increase third-party technology spending. Virtual care spend is a key focus: In 2021, over 90% of the physicians who use telemedicine platform services felt that they offered comparable quality to in-person consultations. Clinical and healthcare workforce shortages and the need to manage healthcare costs will also encourage healthcare providers to adopt AI: Global generative AI software spend on health and healthcare tools will reach $20 billion by 2030.
- New tech challenges. Enterprises will focus on technology spending to manage new challenges in cybersecurity, customer experience, and operational efficiency. Siemens’ investments in IT services produced 15% services revenue growth in 2023, with expectations of double-digit long-term growth in its digital business vertical. Lenovo looks to accelerate its non-PC business revenues, including digital workplaces, hybrid cloud, sustainability solutions, and AI hardware infrastructure.
In the long term, enterprises will be more accountable for tech spend productivity gains and will compete to grow their STEM workforce — the Bureau of Labor Statistics forecasts that in the next 10 years, jobs for data scientists, information security analysts, and software developers will grow by 35%, 32%, and 26%, respectively. To learn more about the future of tech and see the numbers behind the US’s forecasted $2.4 trillion tech spend in 2024, read Forrester’s new report, US Tech Market Forecast, 2023 To 2027, and keep an eye out next week for Forrester’s forecast on global tech spend between 2023 and 2027.
