Tag, you're IT?

Just when you thought you were done digesting the latest round of GDP figures, InformationWeek chimes in with this interesting nugget: Growth in IT spending represented a not-insignificant component of overall GDP growth at the end of 2004.

This is a particularly interesting development for several reasons. Most obviously, increased business investment signals increased business confidence. If companies are starting to spend more vigorously on technological improvements, it means they are growing more optimistic about economic conditions down the road.

But it is also interesting because, if this trend continues, it signals that the economy has finally absorbed the massive wave of technological investment companies made in the late 1990s. The investment boom that fueled tech stock prices and built lovely mansions in Silicon Valley sowed the seeds of its own destruction in that the computers got bought faster than the buyers could figure out what to do with them. We've heard so much the past few years about rapidly increasing productivity, and this is part of the explanation -- it took a few years to harness those investments.

Now, however, businesses seem to be deciding that they've gotten as much as they can out of the technologies they have, and that now it might be time to buy more. All around a good sign.