A recession is defined by two quarters of economic contraction. if 1Q08 contracts AND second quarter '08 contracts, then we are in a recession. However this article, like many others, fails to distinguish between slowing growth, such as we saw in 4Q07, and contraction of the economy. I don't believe either January or February 2008 have shown a contraction yet, so I think this prediction is premature.
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These numbers tell us something troubling about Google, and about the larger commercial universe. Google became the Net's 800-pound gorilla by defying the underlying growth trends of the economy at large. But now, says Andy Kessler, a Silicon Valley hedge-fund manager turned author, "Google is big enough to be affected by cyclical economic forces." Since it peaked at $747 last November, Google's do-no-evil stock has plummeted 37 percent, erasing $86 billion in value.
Like other media companies and retailers that depended on housing and consumer-related business, Google seems to be suffering from the consequences of declining activity. (These things are notoriously difficult to quantify, but my unscientific tally is that 75.196 percent of all Internet ads are for home-equity lines of credit and mortgages.) If the economy is grinding to a halt, one would expect clicks of all categories to decline. "Search may be the best advertising medium in the history of the world," says Internet analyst Henry Blodget. "But that doesn't help much when searchers are broke."
If even Google is showing a decline of economic activity in a big chunk of its domain, it can mean only one thing: we're in the portion of the economic cycle that rhymes with shmashmession.
© 2008
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