Enterprise technology spending in the United States has been growing by 8 percent per year on average since 2022.1'Forecast: Enterprise IT spending by vertical industry market, worldwide,' Gartner, multiple years. This surge is not surprising, given the increasing role technology plays in how businesses function and create value. The issue lies in what companies are getting for that spend, and the track record on that score is mixed. While analysis linking tech spend to labor productivity is notoriously inexact, labor productivity has grown by close to 2 percent over the same period of time (Exhibit 1).2'Forecast: Enterprise IT spending by vertical industry market, worldwide,' Gartner, multiple years; US Bureau of Labor Statistics data. Data further show that the relationship between IT spend levels and labor productivity varies by sector, creating more uncertainty. The communications, media, and services sector, for example, has sustained growth of greater than 4 percent in...
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