So as the famous Chinese saying goes, we live in interesting times.
But are we talking recession or depression? Well, at one level, it doesn’t matter, as a small business owner you get out there to your customers wherever they are, and if you need to make changes, you make them. Now.
But I’ve been interested in following the recession vs depression story. And it made me wonder what people are really thinking.
So I turned to Google Trends and Google Finance to see what I could see.
Google Trends traces how often keywords are used in searches AND how many times they appear in the online news. Google Finance traces stocks.
The figures tell a bit of a story (click the image to see a larger version).
What happened was:
- in September searches for depression double, while searches for recession increase, but nowhere near as much. Media references to recession and depression increase sharply for a week – references to depression rapidly plateau, while references to recession continue to increase rapidly.
- October 1, the market (already dropping for some time) goes into freefall. The crisis is clear and present.
- From October 1, searches for depression clearly peak and fall. Media references to recession continue their surge well into October.
The rising search activity around depression in the lead up to 1 Oct is what interests me most. When the market tanks, the searches tail right off. The wisdom of the crowds moves on to greener pastures!
Personally I am optimistic that this time around (compared to 1929) the policy response is going to be a lot smarter. This will hopefully avoid dropping economies into a prolonged, deep recession (aka depression). Anita Campbell points out in It’s A Recession, Not a Depression that the US has already been in recession for 12 months. If you go by the historical lengths of recessions, the start of the climb out might not be too far off.