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The Recession Will End… When Google Says So?

Says who: Eric Schmidt, Google’s chief executive

“While there is obviously a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us… So we’re very optimistic now about the future. We now have the business confidence to invest heavily in the next phase of innovation, hoping to invent the future as we see it.” (via SeekingAlpha)

Why he might be wrong: For the 15.1+ million Americans facing the most challenging job market in decades and struggling daily, with limited to no income to pay for food, lodging, and health care expenses, the worst is far from over. With unemployment rate expected to grow above 10%, it’s almost impossible to agree with Schmidt when he says the worst of the great recession is over.

How he could be right: Google’s Q3 revenue of $5.94 billion is a strong sign that the Internet advertising market is rebounding from its steepest dive since the dot-com collapse a decade ago (falling 5.3% in the first half of the year). Since the Google search engine hosts the Web’s largest advertising network, it has a pulse on e-commerce activity and can serve as a barometer of broader economic growth or contraction. And Schmidt isn’t alone when it comes to technically calling the recession over (or at least, to get technical, stop contracting). A bunch of folks have been calling its end: the National Association for Business Economics; Ben Bernanke; Nouriel Roubini. In some sense, Schmidt may simply be among the last to say it.

Our call: Perhaps Larry Summers, Obama’s chief economic adviser, said it best: “There’s a difference between having an expansion and an economy that has recovered.” Schmidt is overly optimistic when he says that the worst is over, at least when it comes to unemployment. And if employment is a lagging indicator, we can only hope that Schmidt’s enthusiasm indicates that Google is again poised to lead the country to new heights of growth and prosperity. In the meantime, it might be nice for Schmidt to open his free cafeterias and give some free meals to some of the 15.1+ million of unemployed Americans.

Tags: corporate America, economy, Google, recession, recovery, The Recession Will End...