You didn’t really think that Silicon Valley would be immune to the general convulsions in the overall economy, did you? I am not sure it is as bad as the NYT gleefully makes it out to be, but there is growing evidence of a tech slowdown, including M&A deals and IPOs drying up, slower job growth, signs of weakness on Web advertising, cautious corporate IT spending, and rising costs for companies that offshore their labor force due to the decline of the dollar.

The latest numbers from the National Venture Capital Association show that the startup economy was starting to feel some pain in the first quarter. Venture-backed M&A deals hit the lowest level in a decade, with only 56 deals announced in the first quarter, down from 83 in the fourth quarter of 2007. The IPO market also dried up, with only five venture-backed IPOs, compared to 31 in the fourth quarter of 2007. (See chart above). The average amount raised for each IPO was $56.6 million (down 42 percent quarter-over-quarter). And the average M&A deal size was $124.6 million (down 40 percent quarter-over-quarter)

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