I've been writing for a year now on how the information technology sector would be impacted by an economic downturn. Well, it looks like we're going to really find out. As I've written, when credit dries up and loans and capital are hard to get, tech companies hunker down and freeze new hires, push off marketing campaigns, and roll back research and development efforts. And if none of that stuff works, then layoffs come next.

But that's only IF companies stop spending money on information technology products and services. Right now, it would seem such spending is slowing, or will begin slowing soon. But actually, that hasn't happened yet.

One of the country's top technology analysts, Mark Murphy of Piper Jaffrey, has actually looked at the numbers and scoured the estimates and concluded that things aren't as bad as they seem right now in terms of IT spending.

Using the slaughtered financial sector as a bellwether, Murphy concludes that IT spending from one of the U.S.'s worst-off industries may not be so bad. Talking with senior tech officials at some of the country's largest (remaining) financial institutions, Murphy says that things actually look fairly optimistic.

From Murphy's report . . .

Positives:

Projects have not been stopped midstream; those that began last year continue to move forward.

Investment banks that saw this coming took actions to reduce costs a year ago, and have actually begun to improve spending in recent months.

Spending on infrastructure, compliance-driven projects and customer-facing applications as well as advanced networking technologies, “is seen as non-deferrable.”

The spending environment is not expected to be as severe as the 2001-2002 recession.

Negatives:

2 out of the 3 firms on the call believe new-business engagements are slowing, and/or decision making cycles are extending.

One of the integrators said they now see their revenue from financial services growing 20% this year, rather than the 40% growth they had once expected.

While Q4 budget flush is still expected, it is likely to be “slightly muted.”

Opinions on 2009 IT budgets were “lukewarm,” with a consensus that they will be up year-over-year, but perhaps not as much as originally anticipated.

Discussing a separate call with system integrators at major technology firms, Murphy adds that “the overall tone of the conference call was not as Draconian as investors may have expected. especially in light of the extreme recent gyrations in the financial services industry.” According to Murphy, the firms that should fair best in the coming months are companies like Oracle, Informatica and Red Hat - companies that have the business software applications that are needed in any economic environment.

Hey, it's not great news, but it's not as bad we might have thought. Another reason, after a week like this, to enjoy an adult cocktail while watching Barack Obama and John McCain slug it out at Ole' Miss tonight.