Tech Companies, Long Insulated, Now Feel Slump

The technology industry, which resisted the economy's growing weakness over the last year as customers kept buying laptops and iPhones, has finally succumbed to the slowdown. In the span of just a few weeks, orders for both business and consumer tech products have collapsed, and technology companies have begun laying off workers. The plunge is so severe that some executives are comparing it with the dot-com bust in 2000, when hundreds of companies disappeared and Silicon Valley lost nearly a fifth of its jobs. October "was like turning a switch," said Robert Barbera, chief economist at the Investment Technology Group, a research and trading firm. "Everything pretty much shut down." Tech companies directly account for about 4 percent of the nation's employment. And globally, companies and governments spend about $1.75 trillion on technology a year, according to Forrester Research. But the industry's importance to the world economy is larger than its size might suggest. Technology has fueled many of the productivity gains of the last two decades. And about half of the capital spending by corporations goes toward technology products, according to Moody's Economy.com. As struggling businesses cut back on spending of all kinds, a slowdown in tech proved inevitable.