Tuesday, June 2, 2009

Speed, III

It seems that these days, as far as our economy is concerned, bad news can be good and good news can be perceived as bad, and we don’t have time to really assimilate it, let alone to do anything with or about it. One company’s earnings are bad but they are not as bad as analysts had predicted so the negative earnings become good news and the stock price rises. Another firm’s good news is perceived as negative since the good news is not as positive as analysts had calculated. So that firm’s stock falls.
The Internet, of course, is what makes this recession (if that’s what this depressing state of affairs is) different from the others. We learn about possibilities, scenarios—worst-case, best-case, disaster, etc—as soon as the theories leap from someone’s keyboard or mouth. There is a race to see who can get what information that has even a remote possibility of being something new—out there the quickest. Then wait a nanosecond for a reaction and then go on to the next exclusive. Now, this is how news gets publicized, and that’s the way it works, of course. But when it comes to markets and investors, each nuance can have an echo effect, or even an aftershock, that can actually cause what has been predicted. At least, that’s what we heard the past few months. And it is a bit unsettling.
Internet use has, obviously, been growing. Leading up to and during the 1990-1992 recession, the Internet didn’t play an important a role in the dissemination of information, misinformation and rumor, as it does today. According to Pew Internet and American Life, in mid 1995 about 14% of people in the U.S. were online. During the recession of 2001-2003, which was the result of the dotcom bubble burst, about 60% of people in the U.S. used the Internet. That 60% pretty much was a plateau of sorts during the period from Aug-Sept 2001 thru Feb 2004, with only a slight increase, followed by a small dip and then a rise to around 75% by the end of 2007.) http://www.pewinternet.org/trends/Internet_Adoption_3.18.08.pdf And here we are today drenched in as much information we can get.
And how to know if we really are a recession? It used to be that we had to wait for the official word from the National Bureau of Economic Research to tell us. They are still the official arbiters but now, we have almost as much information as they do. Whether that is good or bad, depends on what we do with it, I guess.

[Thank you to Aaron Smith, Research Specialist with the Pew Internet and American Life Project based in Washington, D.C. for providing us with the Internet use data.]

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