CANNES, FRANCE The drumbeat of bad news doesn't seem to let up, but count Eric Schmidt in the optimist camp. During a Q&A here at Cannes with Publicis Groupe CEO Maurice Levy and at a press conference afterward, the Google CEO said he believed the worst was over, and that the U.S. economy should begin to grow again in the fall.
The recession has not left Google untouched. Its business has slowed, Schmidt said, because while consumers continue to use search, they are more selective about their purchases and tend to spend less when they do open their wallets. That, in turn, depresses the amount advertisers bid in Google's auction system, he said. But Schmidt does not believe the economic crisis has shaken U.S. consumers' proclivity to spend money by going into debt. "Americans love their credit cards," he said. "If people are concerned Americans will stop spending, you do not understand the American psyche."
Google has seen a decrease in search in categories like mortgages and an increase in searches for things like bankruptcy services. That's evidence, Schmidt said, that the Internet is working as it should. But it is not part of a long-term trend of consumer retrenchment, he added. "It's shocked me that Americans started to save," he said. "My guess is that's a temporary phenomenon."
Schmidt is making his first visit to the International Advertising Festival.
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