When Did You Learn About the Recession?

By Paul Carton and Andy Golub

A few days ago the world was shocked – shocked! – to learn the U.S. had entered a recession all the way back in December 2007.

According to the National Bureau of Economic Research (NBER), that is when a broad range of U.S. economic indicators peaked, followed by a "decline in economic indicators in 2008 (that) met the standard for a recession."

So let's pause and ruminate for a moment. Ask yourself a question – when did you find out the U.S. was in recession? And when did you start recession-proofing your financial affairs?

Was it in January 2008? (Hint, the mid-January Dow was 12,500, and the S&P was 1,400).

Was it in February? Or in March?

In retrospect, knowing very quickly when a recession starts is quite an important thing – one that can have a life-altering impact on your financial future. So ask yourself one last question:

When did your top personal financial adviser inform you that the U.S. was in recession?

If your answer was "way back in January 2008," well that's pretty darn good. It means you had early intelligence that you could use to make critically important decisions protecting your financial future.

But if you did not have clear information early enough, you owe it to yourself to ask, "Why not?"

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The ChangeWave Research Edge

Here at ChangeWave Research, we constantly challenge ourselves to provide correct answers to the most critically important financial questions – months before other sources.

That's a key reason why, 11 months ago – back on Jan. 9, 2008 – our first report of the year was titled, ChangeWave Survey Points to a Recession in Consumer Spending.

How did we know about the recession so early?

That's exactly what our research network has been set up to do. That's why our 20,000-member network exists – to let you know weeks and months before everyone else about the critical changes that are affecting both companies and the overall macro-economy.

A glance at the very first chart from our Jan. 9 consumer report shows why we were able to call the recession from the start.

For the first time in our consumer surveys, the red line (percentage of consumers saying they'll spend less money going forward) had clearly crossed above the blue line (percentage saying they'll spend more money).



In other words, for the first time we were clearly registering negative consumer spending growth going forward.

Now let's take a closer look at that same chart – this time showing it from the first time we ever asked this survey question back in August 2004 right up to our most-recent results in November 2008.



Here you can see why we continue to remain so bearish today. The consumer pullback is now even-more pronounced than at any previous point of the recession – with 59% of U.S. respondents saying they'll spend less money over the next 90 days, seven points worse than previously.

Moreover, only 10% say they'll spend more – eight points worse than previously.

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Of course, our ChangeWave Research Network focuses on far more than just consumer spending. And it's worth pointing out that when we released our second report of 2008 (on Jan. 18) it was titled, Clear Signs of a 1st-Quarter Recession in Business Spending.

We've been tracking a horrific decline in business spending ever since.

In retrospect, it's astonishing that it took the government 11 more months before it announced the U.S. economy had been in a recession for almost a year. Equally astonishing was the surprise on Wall Street – the Dow closed down 678 points lower the day of the NBER announcement, its fourth-biggest decline ever.

What's Next?

Being among the very first to detect a recession isn't the only thing our ChangeWave Research Network does. We also plan to be among the very first to detect the end of the recession.

We're currently in the field with a brand-new survey on consumer spending which will enable us to know exactly what to expect from the consumer economy in the final weeks of the year.

Our weekly surveys are an exceptionally accurate warning system, enabling us to spot shifts in economic trends – both up and down – well in advance of other sources. The best way to get these results – along with our other ongoing research – is to subscribe to ChangeWave Investing, the weekly newsletter featuring all of our survey findings.

We guarantee our subscribers won't have to wait around for an official announcement to tell them – 11 months too late – that the recession is over. The moment there's an uptick in the economy they'll know about it – before virtually everybody else. That's the ChangeWave Research edge.

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Paul Carton is the Director of Research for the ChangeWave Alliance Research Network. Andy Golub is ChangeWave's Associate Director of Research. The Research Network is a group of 20,000 highly qualified business, technology and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. ChangeWave surveys its network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

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