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Economy in Brief

The Technology Sector Is Firming
by Tom Moeller March 25, 2010

The Federal Reserve Bank of San Francisco generates a figure called the "Tech Pulse Index" to follow developments in the U.S. technology sector. It is designed to be a summary statistic that tracks the health of this sector in a timely manner. Lately, it has been flashing a signal of solid recovery with activity at the highest level since the summer of '08.  

During 4Q09, the index expanded by 33.7% (AR) following a lesser 3Q gain. These gains followed four negative readings during the recession which totaled 25.8%. The historical relationship of the index to the sector is quite good, having an 92% correlation with the quarterly change in real information processing equipment & software spending in the National Income & Product Accounts during the last twenty years. 

The index is made up of several indicators: 1) The index of industrial production of computers, communications equipment, and semiconductors, 2) payroll employment in the  industries of computer and electronic product manufacturing, telecommunications, web search portals and data processing, computer systems design & related services, 3) real private nonresidential investment in computers & peripheral equipment, software, & communications equipment, 4) real personal consumption expenditures on computers, peripherals and software, 5) manufacturers' shipments of computers and electronic products in current dollars (used for January 1992 onwards.)

The data can be found in Haver's SURVEYS database. 

Tech Pulse Index  (FRB San Francisco) February January December 2009 2008 2007
Index Level (Jan. 2000 = 100) 94.0 87.5 84.0 87.7 107.2 102.9
  Q/Q Chg. 33.7% 17.3% -6.1% -18.2% 4.2% 9.9%
  Y/Y Chg. -1.6% -18.8% -25.8% -- -- --
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