In previous posts, I examined the high-tech industry in significant detail by picking a representative sample of leading systems, software, and semiconductor companies.
Taken as a group, the selected firms serve the full range of technology markets – the first tier markets of the three C’s (computer, consumer and communications) and mobile, as well as the second and third tier sectors of industrial, automotive, medical and mil/aero.
The examination revealed that macroeconomic factors emerging after 2007 were severely hampering growth across the industry. These factors were entirely outside of the sphere of high-tech, as they were caused by the ridiculously leveraged positions of large commercial banks and sovereign governments in nearly all of the developed and emerging national economies worldwide.
The ‘cures’ imposed by various governments and central banks for their economic woes were derived from existing economic orthodoxy and its standard models and theorems. However, in this instance, the debt problems proved so great that the remedies not only failed but actually locked the global economy into a ‘liquidity trap.’ As a consequence, national economies in most of the world are just limping along, with uncertainty and financial duress stifling the extension of credit for capital investment that would facilitate business expansion and growth.
The fallout from this moribund economic environment has included, among other things, an extended period of significantly higher than usual unemployment throughout most of the industrialized world. In the USA in particular, the growth in long term unemployed workers has resulted not only in a worker participation rate that is the lowest observed in the past 36 years but has also been exacerbated by job growth limited almost exclusively to work at or close to the legally mandated minimum wage. The resultant consumer distress has manifested itself as a weakening in disposable income, with negative effects that are still cascading thru the entire high-tech industry.
