Google Predicts a Recession

Well not really, but a lot more people are interested/worrying about a recession now. According to Google Trends, in 2008, there has been a sudden spike in the number of people who searched “recession” on Google. Assuming that people who search the word “recession” are more or less concerned about the economy, they will be more likely to save rather than spend. Its not too far a jump to conclude that there are now a whole lot more people who are cutting personal spending, thereby slowing the U.S. economy…

Another useful thing about Google Trends is that it shows where the searches have originated from. In this case, the number of searches from Singapore are almost double of that from the U.S. Thats alarming because thats a very high proportion of people in Singapore that are rather worried about the economy. Unfortunately there are no numbers so you can’t find it as a percentage of the population but to put it in perspective, the U.S. has 300 million people. Singapore has 4 million. Thankfully Singapore’s a lot more dependent on exports than the U.S. but I wouldn’t want to be the one trying to calm everybody down…

How Long Will the Recession Last?

According to Intrade, the market is pricing the odds of a recession at 67%. 59% of American consumers already believe we’re in one along with Goldman Sachs and Merrill Lynch. Only the economists are a bit behind at 49%…

So maybe a better question to ask would be how long will the recession last?

According to a paper co-authored by Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University, the US recession bears striking similarities to five other large financial crisises and the US would be lucky even if it has a recession… As long as it won’t last too long… The paper uses a lot of graphs to really hammer in their point, i.e. the U.S economy is doomed, and is a very convincing argument.

Is the US Subprime Crisis so Different?

The other article that foretells imminent disaster is one written by Nouriel Roubini, professor at the Stern School of Business at NYU. Roubini’s analysis is a twelve step scenario towards a global financial meltdown. Its basically a chain effect. The housing market will crash, followed by the mortgage market, and then followed by consumer credit defaults, corporate defaults, bankruptcies, a lack of liquidity and result in the largest recession over the last quarter of a century.

The Risking Risk of a Systemic Financial Meltdown
The Twelve Steps to Financial Disaster

Its all looking rather ominious. From a very selfish viewpoint, I’d have loved a nice short recession simply because I’d be looking for a job in a bull market. Unfortunately if both of these articles prove correct, it’ll still be a difficult market when I’m graduating. Perhaps it might be a good idea to hedge my job prospects by shorting the financial sector…