Sunday, April 6, 2008

The US recession and the Google

The US economy bounced back well after the devastating housing sector and a deep financial crisis. This defied some of the pessimist’s view that the economy is going to take a deep fall. Mr. Bernanke, the Fed Chief said that the chances of the GDP growing at brisk pace were less, especially during the first half of this year. This has a strange coincidence in that most US recession periods generally showed two quarters of falling GDP.

The battered and bruised housing sectors showed some signs of recovery and sufficient measures have been taken to expand the amount of hosing credit available through Fannie and Freddie and the rate for the 30 year mortgages are lower than 6 percent. This has indeed made the housing affordable for majority of the people.

The effect of the recession may not be comparable to that of the one experienced during the year 1929 or the Japan’s downturn during the 1990s. Nevertheless, it will increase the unemployment rate and a decrease in the consumer spending.

Now let us see how the recession will have its effect on the Google.

As long as the US economy was growing, Google continued to enjoy its market share. This is reflected from the share value of Google rising from $85 in the beginning to $747.24 during the first week of November 2007. Later, because of the corrections in the market saw the share value tumble to about $450.

Possible effects on the Google

  • Whenever the US consumers rein their spending, it will have an indirect effect on the company.
  • The possible merger of yahoo with the Microsoft Corp will provide a tough competition.
  • With financial crisis gripping all the industries, fewer number of people going in for advertisement in the electronic medium resulting in less returns to the publishers.

However, we can hope that Google with its unparalleled technology will wither away the troubles posed by the recent recession and would continue to grow in the years to come.

Let us wait and watch…

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