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Surprising Science

Look to the Ever-Nimble Tech Sector to Forecast Economic Recovery

All too familiar with the ravages of the late-90s tech bubble, tech companies are not playing the fool this time around.

Though they are by no means seeing stellar profits–in fact sales were down ten percent in March–the tech sector is looking significantly better than other areas for one key reason:

When the economy went south in the fourth quarter many retailers halted new orders from Asia immediately fearing they would be left with excess inventory collecting dust on their storerooms. This was the case in 2001 when Cisco had to write off $2.5 billion in unsold stock.

An ability to stop the supply chain at the drop of the hat is one of the sector’s great advantages over others, and they are equally nimble to restart orders when the climate improves. Also, real-time order tracking only improves tech’s ability to gauge precisely when and where a certain volume of products will hit the market.

Giving an update on his company, Intel CEO Paul Otellini told Wired that “the worst is now behind us from an inventory correction and demand level adjustment perspective.” Unless they have to make many further inventory corrections, it all looks good for tech being at the front of the line when a recovery finally kicks in.


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