By Paul Carton
December 5, 2008

Most everyone knows it's a jungle out there for the U.S. economy, but how does this recession measure up to the last one we lived through in 2001?

According to ChangeWave's latest corporate survey - conducted November 20th through December 1st - the U.S. economy is caught in the clutches of a recession far deeper and more painful than anything seen back in 2001.

The ChangeWave survey of 3,029 U.S. respondents found alarmingly low 4th Quarter sales projections, abysmal visibility going forward, a deteriorating job market and an unprecedented pullback in capital spending - and that's just for starters. Here's the snapshot:

4th Quarter Economic Freefall

A whopping one-in-two respondents (51%) project that their company sales will come in Below Plan for 4th Quarter 2008 - 16-pts worse than the previous quarter. Only 11% say their company sales will come in Above Plan - a 7-pt decrease from previously.

As the following chart shows, these corporate sales projections are the worst ever recorded in a ChangeWave survey dating back to the depths of the 2001 recession

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But there's more. The survey also shows an unprecedented deterioration in the labor market. Nearly one-third (31%) of respondents say there are Less new hires in their company at this point in the 4th Quarter vs. last quarter - a 9-pt increase since the previous survey.

Only 8% say there are More new hires.

OK. So far we've been looking at symptoms of this accelerating recession, now let's look at one of its key causes.

Credit Crisis Tightens its Chokehold

Over the past year we've been measuring the impact of the credit crisis on U.S. businesses. Yet despite the federal government's numerous attempts to open the credit spigot, our latest data shows the U.S. credit crunch is continuing to worsen.

Three-in-ten respondents (30%) now say that it is harder for their company to borrow money than it was just 90 days ago - a 5-pt jump from the previous survey. Less than 1% say it is easier to borrow money.

Any 1st Quarter Relief? Not a Chance

On top of everything, the current ChangeWave survey shows a huge plunge in visibility for 1st Quarter 2009.

Sales pipeline projections for the 1st Quarter show 39% of respondents reporting they'll come in Below Plan,18-pts worse than previously, while just 9% say their company will come in Above Plan - 12-pts less than previously. These are by far the lowest sales pipeline numbers we've ever recorded.

But in perhaps the most ominous sign of the rapid deterioration in U.S. business conditions, respondents also project the largest cutbacks in capital spending we've ever recorded in a ChangeWave survey since we began asking this question back in December 2002.

An eye popping 45% project a decrease in their company's 1st Quarter capital budget compared to the current quarter. Only 6% project an increase.

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

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

Continued deterioration for the next 4 quarters has led us to this December's historic collapse.

To sum it up, 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.

Moreover, the U.S. credit crunch is weighing even more heavily on U.S. businesses now than at any previous point of the past year.

Investors beware - a retesting of the November stock market low looks like a virtual guarantee with survey results like these.

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Jean Crumrine co-wrote this article.