iPads Splurge as Sign of Economic Recovery

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Consumption has always been the mantra of economic growth. But when there is an increase in consumption, it is a good sign that the economy is now moving back on track. This especially holds true if what are being consumed are iPads that are being used for business.

Corporations are now including iPads to their approved device list and they’re happening at an amazing rate. Companies are now capitalizing on this technology and are thus incorporating it in their budget. This splurge on a US$500 technology is a signal that business performance is on the rise and that companies are starting to spend the cash they’ve earned.

Although individual consumers are thrifty these days, company spending on technologies, such as iPads, that will be used for business could spark a strong economic recovery. It would nudge the Standard & Poor’s 500 index further to its third straight year of double-digit percentage gains.

According to market strategists, technology and energy companies are the primary beneficiaries of business spending. The strength of financial, energy, and technology stocks point to a new stage of economic recovery which signal that the recession is over.

One example of corporate spending on technology helped IBM Corp. IBM had a 7 percent jump in revenue thanks to companies in the U.S. upgrading their computer systems. Its stock jumped almost 4 percent last week.

Energy companies are also in for the taking. They are leading the market this year with a 3.4 percent jump because of higher demand – another sign of an improving economy. For example, oil company Schlumberger had a 31 percent rise in profit in the most recent quarter and was recorded last Friday.

Financial companies are also benefiting from loans to businesses, which is a sign that those companies plan to expand. Financial companies have the added benefit of being cheap. The price-to-earnings ratio of the financial companies in the S&P 500 index averages 11.6, about half of its historical average. Financial companies are cheaper than any other group except for health care, which costs 11.2 times earnings. Even utilities companies, whose slow growth rates typically make them the lowest priced group in the market, are trading at 13.6 times earnings.