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The tech squeeze continues

? Revenge of the Communists, Part II |


| Who Cares about Savings?--Part I ?

June 01, 2005

The tech squeeze continues

Michael Mandel

The latest figures from the BEA (released May 27) show continued erosion in tech spending by consumers (as a share of total spending). No bottom yet, especially after SBC's decision to cut the price of broadband.

Consumer tech spending includes consumer electronics, computers and software, telecom, cable, and video rental.

12:21 PM


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I was just reading something the other day that described how much electronics was now in a typical high-end refrigerator compared to low/no-tech appliances 20 years ago. Ditto for cars. Even TVs and radios are now more "high" tech. So, I wonder what the definition of "tech" should be these days. I would have thought that we want to get at how much money flows into technology-focused businesses from consumer hands.

I think one thing we should do with economic analysis is focus some real attention on shifting and blurring boundaries.

And finally, is your so-called "tech squeeze" simply what others call "tech deflation", or is it some other economic phenomenon?

BTW, why does your blog software throw away the blank lines I so carefully insert between my paragraphs?? No other blogs do that.

-- Jack Krupansky

Posted by: Jack Krupansky at June 1, 2005 01:20 PM

Can you show a projection going back 10 years? I want to see what it was in the late 90s.

If tech spending is lower as a percentage of income, that could just be because of a decline in selling prices. PCs cost less than they used to, for example.

Food declined as a percentage of income spent on it over the last 100 years as well.

Posted by: Kartik at June 1, 2005 03:10 PM

Yes, food fell as a share of income, because more money went into new, innovative industries such as electricity, radio, TV, airplanes, automobiles, etc. Those industries saw a big increase in share.

What's surprising now is that we have these new technologies which are *not* seeing an increase in income share. Kind of perplexing.

Posted by: Michael Mandel at June 5, 2005 09:58 PM

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