Issue link: http://cp.revolio.com/i/760098
THE DATA CENTER JOURNAL | 3 www.datacenterjournal.com presidential election shakes things Up a lthough the data center industry has no particular interest in politics, poli- tics can nevertheless have a major impact on the industry—particularly through energy policy. Judging from the positions of the two major-party candidates, the 2016 presidential election presented some considerable differences in this regard. e victory of Donald Trump likely portends less government intervention in the energy market, specifically by way of carbon taxes or a cap-and-trade system. Although the outgoing president, Barack Obama, was unable to muster the political will for such measures, Hillary Clinton might have been able to. Regardless of one's opinion regard- ing the merits of these kinds of policies, the inevitable result of greater government intervention in a market is higher costs for someone—in this case, data centers might have been on the hook for major energy- cost increases. Trump appears unlikely to pursue such a path, but only time will tell, particularly if the midterm election in 2018 shis the balance of Congressional power. Another area where the election results may bring change is immigration policy. One possible outcome is fewer immigrants with technology backgrounds, but such a change assumes the Trump administration will see past claims of a perpetual talent shortage. (ese claims typically fail to address the fact that many people with STEM degrees go into other fields—50% by some estimates.) Accord- ing to Mark iele, chief strategy officer for Apcera, foreign perception of the U.S. as more nationalist or protectionist could lead to some decline in use of American cloud or data center offerings. On the other hand, it's uncertain whether those sentiments would even register against the existing perception of the U.S. as a para- noid international spy—Edward Snowden's NSA revelations may have already done much more damage. precarioUs economy holds on one more year To look at the record numbers for the major stock indices, one would think the economy is roaring. Yet under the hood, a number of problems remain unresolved. As with politics, economics would seem to be peripheral to the daily tasks of data center operators, yet as the dot-com crash and the Great Recession showed, almost no one is immune from broader problems. Since 1960, the U.S. has suffered a reces- sion once every seven years on average, according to Federal Reserve data. At that cadence, the economy is due for another downturn. Among the indicators that have shown little or no improvement in recent years is the M2 money velocity, which has followed a fairly clear (and precipitous) downward trend since its peak in 1997. is metric, according to the Federal Reserve's definition, relates to the number of transactions between individuals in an economy. Moreover, the labor-force participation rate has remained at 1970s levels, having declined from its peak around 2000. is number, about 63%, contrasts with the headline unemploy- ment number of just below 5% (suggesting about 95% employment). Moreover, the Federal Reserve has gone another year without raising interest rates much above 0%. Low interest rates were supposedly an emergency measure to help stabilize a flag- ging economy during the Great Recession. ey have been at or near 0% since 2009, indicating a lack of central-banker faith in the so-called recovery. And let's not forget the ballooning federal-government debt; despite reports of a falling on-book spending deficit, the debt in November 2016 nevertheless grew a whopping $1.2 trillion year over year, reaching just shy of $20 trillion (about 107% of gross domestic product). Only time will tell whether a new presidential administration or some other change will hold off a recession for another year in 2017. e data center industry, like every other industry, may be in for some rough sailing. WorldWide it spending still stagnant In September 2015, I noted in an online Data Center Journal article that the magic number for worldwide IT spending according to Gartner seems to be about $3.5 trillion. In 2008, the research firm forecast $3.4 trillion for that year and $3.6 trillion for 2009. Naturally, estimates for the Great Recession later fell. Gartner estimated that spending did exceed the $3.5 trillion mark for 2012–2014, hitting roughly $3.7 trillion, but it then fell back to $3.4 trillion in 2015. (To be fair, the re- search firm notes that some of that decline owes to the relative strength of the U.S. dollar.) It is predicting little to no change for 2016. One common feature of Gart- ner's forecasts in recent years has been overestimates of growth, perhaps in part because of the economy's failure to deliver the promised recovery despite constant propaganda. e fact that IT spending has seen almost no growth in eight years (in uncorrected dollar terms)—staying right around that "magic" $3.5 trillion mark— means something is amiss for a market that's so important to business around the world. Naturally, many factors play a role: the relative strengths of currencies, business profitability, commoditization of different aspects of IT infrastructure, the benefits (or lack thereof ) from Moore's Law and so on. Worldwide IT spending seems, however, to mirror the broader economy: it's not terrible, but it just lacks that spark of growth that would indicate a healthy market. Perhaps 2017 will clarify the situation. alternative energy: all Wind? Whenever a big-money data center player (think Apple, Facebook, Google or Microso, for instance) decides to build or buy alternative-energy capacity, the headlines might inadvertently lead one to think wind and solar power are taking the data center industry—if not the nation— by storm. Yet despite any impressions that these headlines create, U.S. Energy Information Administration data indicates that wind and solar—the darlings of some big data center operators—constitute just slightly more than 2% of total consump- tion in the U.S. for 2015. ese two sources were also less than 25% of total renewable-energy consumption. Indeed, they have been growing in their contribu- tion to the overall energy mix (more likely because of government subsidies than market demand), but they have far to go before reaching parity with natural gas, coal or even nuclear power.