How Technology Performs in Recession

Posted by Ahmad Barirani in Blog      No comments

Aug
16

There are people who doubt about the importance of technology in our society. Especially when a recession is going on, we always tend to think that basic goods such as food and gas are more in demand because people are budget constrained and have to focus on whats important. Well lets take a look at how, Nasdaq, Dow Jones, S&P, Google, Apple and Exxon Mobil have performed since the peak of the market before the recession, that is since January 2008.

As we can see markets have generally “favored” technology as NASDAQ fell by much less than Dow Jones and the S&P. Looking at the biggest tech and oil companies, we can see that investors have rushed towards Apple but that Exxon Mobil has done very much like Dow Jones and S&P in terms of drop in stock value.

Technological innovation leads to increased productivity. And guess what, and increase in productivity is one way to get out of a debt crisis recession. In fact, producing more goods and services means having a higher GDP. And as the GDP grows, a smaller proportion of it is associated to the country’s debt. Could it means that markets are doing the right thing by moving capital to sectors that promise boosts in productivity?