Toby Smith

U.S. Recession Deepens

by Toby Smith   12/15/08

Our sales pipeline projections data for Q1 show that 39% of respondents reported they'll come in below plan -- 18 points worse than previously. Just 9% said their company will come in above plan -- 12 points less than previously.

These are by far the lowest sales pipeline numbers we've ever recorded in a ChangeWave survey.

In perhaps the most ominous sign of the rapid deterioration in U.S. business conditions, respondents also projected the largest cutbacks in capital spending we've recorded since we began asking this question in December 2002.

An eye-popping 45% projected a decrease in their company's first-quarter capital budget compared with the current quarter. Only 6% projected an increase.

Most disturbingly, capital spending is plunging at a time of year when we normally see seasonal increases. This becomes immediately apparent when you look at the change for each December, beginning with December 2003, in the capital budgets chart above.

Since 2003, December has always been the peak point of the yearly cycle in this survey -- up until December 2007, that is. That's when we had a critical early warning that capital spending was seriously breaking down.

Continued deterioration for the next four quarters has led us to this December's historic collapse.

Bottom Line

The current ChangeWave survey results provide clear evidence that the U.S. recession has now entered an unprecedented and rapidly accelerating freefall -- with no relief yet in sight.

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Toby Smith is the founder and editor of ChangeWave Investing and ChangeWave Inner Circle. Read his bio here.

The ChangeWave Alliance 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.