Fiscal Cliff Still A Threat To IT Spending
Tax deal should bolster economy%2C but automatic spending cuts that could go into effect in March loom over tech industry.
Cindy Shaw, of Discern, told clients in a research note that the end of the payroll tax holiday, which means most Americans, even those making less than the $400,000 specified in the Congressional budget deal, will see a tax increase, combined with the possibility of looming federal spending cuts, could still put a drag on tech spending in the year ahead.
Shaw cited the fact that Congress failed to extend the payroll tax holiday, as well as the fact that automatic spending cuts might still kick in on March 1st unless Congress strikes another deal. The cuts, also known as sequestration, could affect thousands of government programs, many of them involving IT.
"Due to another two months of uncertainty about federal spending cuts and higher taxes for most Americans effective January 1st, we expect economic growth to slow early in 2013," Shaw wrote. "This should add to recent pressure on IT spending and negatively impact guidance on upcoming earnings calls. We do not view any IT company as immune."
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