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Is the Recession Fueling E-commerce Growth?

The "R" word may be looming over America's economy, but Internet commerce continues to grow apace, and Google's chief economist and several analysts, speaking at a forum on the state of the Web economy, believe it will continue to defy broader economic trends. During the conference, Ed Garrubbo, chairman of the Electronic Retailing Association, reported that while the overall economy tanked, online sales jumped 17% in the first quarter of this year. Meanwhile, e-commerce has grown 22% in the past two years.

"The lesson here is that the economic slowdown is not an Internet slowdown," said Hal Varian, Google's chief economist. "The Internet is looking pretty strong compared to other sectors." Robert Atkinson, president of the Information Technology and Innovation Foundation, a tech think tank, predicted that e-commerce would continue to grow as high-speed connections proliferate and e-commerce technologies improve. "The absolute growth has been steady now for several years. The Internet economy is almost counter-recessional," Atkinson said.

Garrubbo cited data from Forrester Research, which said that more than two thirds of all Internet users have bought products online; 53% of all computer and hardware sales take place online along with 30% of sales of toys, video products and auto parts. In fact, Garrubbo said that the looming recession may actually contribute to e-commerce growth.

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